Construction Project Management

Construction Project Management

Construction Project Management Lessons Lesson One: Introduction to Construction Project Management and Controls. Lesson Two: Becoming a Project Superintendent. Lesson Three: Understanding the Project Manager's Role in Client Relations. Lesson Four: The Project Team and Delivery Systems. Lesson Five: Commercial Project Preparation and Reviewing Construction Documents. Lesson Six: Residential Project Preparation. Lesson Seven: Residential Cost Controls. Lesson Eight: Commercial Cost Controls. Lesson 8 Subway Profit Projections and Job Cost Model.xls Lesson Nine: Commercial Submittals, Samples and Shop Drawings. Lesson Ten: Record Keeping at the Jobsite. Lesson Eleven: Jobsite Layout and Productivity. Lesson Twelve: Computerized Project Management. Lesson Thirteen: Partnering, Meetings, Negotiating and Arbitration. Lesson Fourteen: Labor Relations and Productivity. Lesson Fifteen: Subcontracting and Purchasing. Lesson Sixteen: Residential Quality Control, Inspections and Checklists. Lesson Seventeen: Commercial Quality Control and Testing. Lesson Eighteen: Contract Changes and Claims. Lesson Nineteen: Contract Progress Payments. Lesson Twenty: Project Closeout. Assignments Assignment One Playhouse Example. Assignment Two: The Super Bridge Analysis. Assignment Three: Carlisle, PA Construction Project Budget and Job Cost Model. Assignment Four: Prolog: Setting Up A Project. Assignment Five: Prolog: Entering Contracts, Submittals, RFI’s and Daily Reports. Assignment Six: Prolog: Practicing in Prolog.

Lesson 1: Introduction to Construction Project Management and Controls Introduction: Why Construction Project Management? There is probably no other discipline that is more difficult than construction project management. The general goal seems simple enough. Build a project on-time, within budget, with the stated quality standards and in a safe environment. Easy right? Wrong! Research shows that less than 20% of most construction projects meet these four requirements. Is there any doubt why contractors are often held in the same esteem as used car salesman? Construction project management is known for continual problems. Contractors have a continual record of poor performance. Over the last 20 years construction project management has developed in knowledge, management skills and increased performance and quality. Today there are many excellent contractors that perform well in time, budget, quality and safety. So how do they do it? This course focuses on the best practices of successful project managers. So what’s in it for you? Yours is the opportunity to learn and apply these best practices in a learning setting so that when you enter the workplace you can be one of those in the minority that can perform admirably! The purpose of this lesson is to get you excited about project management and the powerful knowledge and skills that you will learn to help you be successful. The other purpose is to introduce you to the course and how the course will be managed using Blackboard, an on-line course management program.

Lesson Objectives: At the end of this lesson you should: 1. Learn how the course will be managed and what the course expectations are. 2. Know what the definition of a project is. 3. Be able to describe how resources are generally spent on a project. 4. Be able to describe the Construction Keystone Model and Project Management High Leverage Activities. 5. Be able to describe the attitude of a project manager. At the end of this lesson you should be able to: 1. Outline the scope of any project. 2. Create an “S” curve and baseline variance report. 3. Create a construction baseline plan.

How to Proceed: (1) (2) (3) (4) (5)

Read and review Part 1: Course Syllabus. Read and review Part 2: Introduction to the Basic Concepts of Project Management. Answer the self-check questions to evaluate your readiness to take quiz 1. When you feel that you are ready, Take quiz 1. Read and complete assignment 1.

Discussion Materials: Part 1: Course Syllabus (FAQ: Frequently Asked Questions)

FAQ 1:What will I learn? There is big difference between working on a project and providing management and leadership for a project. You will learn specific management skills that will enable you to be successful in managing any construction project. The principles taught will provide both a residential and commercial construction perspective. The course is divided into 20 lessons. The lessons are: Lesson 1: Introduction to Construction Project Management and Controls Lesson 2: Becoming a Project Superintendent Lesson 3: Understanding the Project Managers Role in Client Relations Lesson 4: The Project Team and Delivery Systems (Commercial) Lesson 5: Commercial Project Preparation and Reviewing Construction Documents Lesson 6: Residential Project Preparation (Residential) Lesson 7: Residential Cost Controls Lesson 8: Commercial Cost Controls Lesson 9: Commercial Submittals, Samples and Shop Drawings Lesson 10: Record Keeping at the Jobsite (Commercial) Lesson 11: Jobsite Layout and Productivity (Commercial) Lesson 12: Computerized Project Management (Commercial) Lesson 13: Partnering, Meetings, Negotiations and Arbitration (Commercial) Lesson 14: Labor Relations and Productivity (Commercial) Lesson 15: Subcontracting and Purchasing (Commercial) Lesson 16: Residential Quality Control, Inspections and Checklists Lesson 17: Commercial Quality Control and Testing Lesson 18: Contract Changes and Claims (Commercial) Lesson 19: Contract Progress Payments (Commercial) Lesson 20: Project Closeout (Commercial) FAQ 2: What is the format for each lesson? Introduction: Each lesson will provide an introduction to the general concepts and principles to be learned. Lesson Objectives: Next, each lesson objective will explain what you will learn and how to apply the knowledge. The best way to review each concept is to ask the question, “At the end of this lesson concept I should know __________________ and I should be able to do ______________. How to Proceed: You will then be given instructions on how to proceed through the lesson. The instructions may include reading text materials, reviewing a case study or solving a practice problem from the discussion materials. Discussion Materials: This area will provide additional direction and guidance about understanding certain concepts. This area will also provide examples that will better explain concepts from the text materials. Self-Check Questions: Sample quiz questions with answers will help you assess your readiness to take the lesson quiz. Lesson Quiz:

This will be a ten-question quiz. The questions will be multiple choice or true/false. The questions will test lesson vocabulary, definitions and applications of concepts and principles. Assignments: Six assignments will be given. The assignments will be application oriented so that you may practice and develop greater skill in certain areas. The assignments will be mostly case study problem solving. FAQ 3: How will I be tested? After each lesson you will have some sample, self-check quiz questions that will help you determine if you are prepared to take the lesson quiz. There will be a ten-question quiz at the end of each lesson. The questions will be multiple choice or true/false. The questions will test lesson vocabulary definitions and applications of concepts and principles. All quizzes and exams are closed book. No quizzes or exams made be copied or printed out from the computer. FAQ 4: How will quizzes, assignments and exams be graded? Grading will take place as follows: Quizzes 20 x 10 points = Assignments 6 x 25 points = Exams 2 x 200 points = Total A = 712 and up A- = 675 to 720 B+ = 652 to 674 B = 630 to 651 B- = 600 to 629 C+ = 571 to 599 C = 555 to 570 C- = 525 to 554 D+ = 502 to 524 D = 480 to 501 D- = 450 to 479 E = 449 or below

200 points 27% 150 points 20% 400 points 53% 750 Points

95% 90% 87% 84% 80% 77% 74% 70% 67% 64% 60%

FAQ 5: What is the schedule and when do we meet? This course offers great flexibility because there are no scheduled classes. The most important schedule is to watch and complete assignments, quizzes and exams on or before the due dates. There may be special occasions when help sessions are held. Watch for these announcements on Blackboard or through email. FAQ 6: When are lessons, quizzes and assignments due? Refer to the Announcements and Course Information in Blackboard. FAQ 7: What happens if I turn quizzes and assignments in late? You can not turn quizzes in late because they automatically turn of on the ending date and time. Quizzes can not be madeup. Construction is a time sensitive business. All assignments must be turned in on time. Late assignments will receive points no greater than a 50% score of total points. Special arrangements may be made if it is cleared by the instructor before the due date. This must be done by email.

FAQ 8: What materials will I study? Two texts books will be used for the course. They are Construction Jobsite Management, 1998, William R. Mincks, Hal Johnston, Delmar Publishers; Basic Construction Management, The Superintendent’s Job, 4th edition, 1999, Leon Rogers, Home Builder Press. Both books are available at the BYU Bookstore. All other materials will be available on-line through Blackboard. FAQ 9: How do I access Blackboard? Blackboard and CM 415 can be accessed through route Y. Once in route Y go to Blackboard courses at the bottom of the page. Click on Blackboard courses. Your login name will be your route Y log in name. Your password will be your last four digits of your student number (social security number). FAQ 10: What is Blackboard and how do I use it? Blackboard allows you, the instructor and other students to communicate with one another, share information and learn together. Explore the 11 buttons on the left side of the screen. If you select the help button at the top of the screen you can go to the student manual and other FAQ’s. FAQ 11: How do I get help? It is preferred that you use email to receive help. You can locate the instructor, teaching assistants and students in the class through the communications button of Blackboard. Office hours will also be posted. FAQ 12: How much time should this course take each week? Each lesson and quiz may take between 2 to 3 hours depending on the student. Each assignment will take between 3 to 5 hours to complete, once again depending on the student. You will be given a 2hour limit for each exam.

Part 2: Introduction to the Basic Concepts of Project Management 2.1

Basic Concepts of Project Management

Read and study the following slides.

What is a Project?

A project is an endeavor to accomplish a specific objective through a unique set of interrelated tasks and the effective utilization of resources.

Attributes of a Project (Gido, Clements)

A project has a well defined objective A project is carried out through a series of interdependent tasks A project utilizes various resources A project has a specific time frame A project may be a unique or one-time endeavor A project has a customer A project involves a degree of uncertainty

Identifying the Scope of a Project What is the project objective? What are the series of interdependent tasks? What are the resources needed for the project? What is the project specific time frame? Is the project a unique or one-time endeavor? Who is the project customer? What degree of uncertainty does the project involve?

Let’s suppose that my children wanted for me to build them a playhouse. We would talk about the size and style and come up with a basic design. So I begin to do some planning. I answer the first question: What is my objective? It is to have a playhouse that my children and grandchildren can enjoy for many years to come. What are the series of interdependent tasks? I determine that there are 17 tasks. They are: 1. 2. 3. 4. 5. 6. 7.

Design/Specifications/Estimate Supervision Permit Excavate/Concrete Floor system Wall system Roof system

8. 9. 10. 11. 12. 13. 14. 15. 16. 17.

Shingles Door/Windows Electrical Siding/Soffit/Fascia Insulation Drywall Finish Carpentry Paint Floor Coverings Special Furnishings

What are the resources needed for the project? This is going to take time and money. The money will be spent on materials, sub contractors and the building permit. I will pretend that I will pay myself $20 per hour and also charge a 15% overhead and profit for the project. There is also a knowledge and skill resource that is needed in order to build the playhouse. After some planning it is determined that the project will cost $2,553, the project will take 21 to 30 days and I will have to spent 48 hours of direct labor on the project. How did I come up with these numbers? See the estimate and the cost loaded schedule in Lesson 1, Playhouse Baseline Project Plan found in Blackboard. What is the project specific time frame? Luckily there is no absolute time frame but given the schedule and each activity planned durations totaling 21 days, It may be safe to say that it could be completed in 30 days. Once again see the cost loaded schedule in Lesson 1, Playhouse Baseline Project Plan found in Blackboard. Is this project a unique or one-time endeavor? It definitely is a one-time endeavor. The learning curve will be high. Productivity will be low because there are no major repeatable activities. Who is the project customer? Even though I would like to think that it is I it really is my children and grandchildren. This means that I should listen and be more responsive to their needs. What degree of uncertainty does the project involve? Well, I have never done a project like this before. (Actually I have but for learning purposes let’s pretend.) I have general pricing but material prices and sub contractor pricing could change when I actually go to purchase the materials and service. Something may come up and I may not have the time I expected to do the labor. I have not yet checked with the city about the building permit nor have I check any real estate easements on the property. I am assuming that there will be no problems. My customer (children) also may change their minds as I start building. (It may be a change order!) So there definitely is some risk and uncertainty even with this simple project.

Project Life Cycle

Notice that in the Project Life Cycle slide that almost all projects spend the greatest resources at the end of the project. If a project manager can flatten the line out more projects typically are more successful.

Cumulative Budgeted Cost Curve

The above is a baseline “S” curve. Baseline means the initial plan for the project. An “S” curve is basically is a cost loaded schedule. This slide represents the weeks plan cost (Y axis) against the planned time (x axis). That intersection point creates the “S” curve. Most projects look like an “S” or some call it a banana curve. This is all nice and good but how do you use it? Once your baseline “S” curve is established, then you begin to measure the variance from your plan to the actual. An example is that the actual is below the line then you are spending less than planned. If it is above the plan line you are spending more than planned in relationship to the schedule. An “S” curve only works well if you have real time accurate information to feed into the variance.

Consider the following slide about developing a baseline construction plan. A baseline plan provides a starting place by which to measure variances. This process often referred to as “eating the elephant” breaks down the project into workable pieces that can be identified and measured for compliance to the plan.

Practical Application of Creating a Baseline Project Plan Step 1: Review drawings, specifications and contract for clarity and completeness. Step 2: Divide project into work groups and packages for estimating and scheduling, do quantity takeoffs, create detail sheets that are easy to read and track number of units, unit costs, and estimated duration of activity. Step 3: Complete estimate rollup sheet that summarizes work package activities, activity duration, cost estimate and OH/P. Step 4: Create a schedule (network diagram) from step 3, rollup sheet. Step 5: Create a project baseline“S Curve” to track actual performance to the plan and create a variance report.

2.2

The Construction Keystone Model

Project management is all about whole systems thinking. Just as it takes a whole tree to grow one apple it takes a whole system to build one building. Consider the 14 elements in the Construction Keystone Model. The model shows that leadership is keystone that pulls all the elements of the project delivery system together. Without proper leadership the delivery of projects breaks down and problems occur. Is one element more important than another? No! Any single element can have a dramatic impact on any other elements and the overall delivery of the project. Leadership Contract Administration

Project Management

Design and Estimating

Accounting Human Resources

Client Experience

Skilled Labor

Marketing & Sales Market Knowledge

Technology, TQM Work Processes and Procedures

Innovation

Suppliers, Sub Contractors, Business Partners, Other Stakeholders

Ethics Construction Keystone Model

A few questions to think about: How does the right side of the arch differ from the left side? How could innovation affect project delivery? Why would a construction company need to have market knowledge? Why would the client’s experience be in the center of the arch? Project Management High Leverage Activities I have found that successful project managers share 10 common high leverage activities. Carefully study the following three slides.

Project Management High Leverage Activities Use TQM (Total Quality Management) Tools to do their work right the first time Innovative, question architects and engineers, provide value engineering ideas Company has a shared vision, all employees and subs are on the same page

Project Management High Leverage Activities Communicate clearly and negotiate well Process paperwork with exactness and are proactive Manage the schedule well, don’t miss milestone dates Strong advocates of safety

Project Management High Leverage Activities Good balance of being technologists (good construction skills) and sound business people Excellent problem solvers Keep up with technology and use it to their advantage

From your experience, what do you think are other high leverage activities that help project managers be successful? 2.3

Attitude of a Successful Project Manager

The following story best describes the attitude of problem solving that every project manager should have. The Go-Getter In 1921 Peter B. Kyne wrote The Go-Getter, a Story That Tells You How to Be One. This book tells how Mr. Ricks, the owner of a lumber and logging company, was having a problem with his Shanghai office. His supervisor's explanation was that he was surrounded by men who were too young for responsibility. In addition, three managers had "gone rotten.” The company would be in trouble if things persisted as they were. About this time a crippled veteran by the name of William E. Peck requested an interview for employment. "Please give me a job. I don't care a hoot what it is, provided I can do it. If I can do it, I will do it better than it has ever been done before. If I can't do it, I will quit and save you the embarrassment of firing me." The old man was impressed and, going over the heads of all the executives and supervisors, hired William E. Peck. Bill was warned to produce and not get out of line. "The first time you tip a foul, you'll be warned. The second time, you'll get a month lay-off to think about it. The third time you will be out for keeps." Peck was given the task of selling a lot of undesirable lumber that the company was stuck with. He was happy. He said, "I can sell anything at a fair price." He hit the ball hard. For two months they saw nothing of him. He sold several boxcar loads of skunk spruce, siding, shingles, Douglas fir, and redwood. He sent orders back to the office almost daily. He sold five new accounts and increased sales dramatically. So impressed was the owner that he thought Bill might be a good man to head up the Shanghai office. But, before a final decision, Bill would have to go through the "test." The "test" was to send Bill on an errand to obtain a very expensive blue vase which had been described to him in detail. Bill was told to obtain it and deliver it to a stateroom in car seven on the train for Santa Barbara so that Mr. Ricks could take it to his wife for their anniversary. Bill was told the approximate location of the neighborhood-which street, which

store, and the window where it could be seen. It was Sunday and after 3:00 p.m. when Bill went to find the vase. He went to the area where the vase had been seen but he searched in vain, street after street -two blocks of additional searching in all four directions, four more blocks before he finally discovered the object of his search. He kicked the door, making an infernal racket, but no one responded. He backed away and read the sign over the door, B. Cohen's Art Shop. He limped to a hotel, picked up the phone book, and found nineteen B. Cohens. He searched for the art dealer in vain and then dialed all nineteen numbers. He emerged from the phone booth wringing wet from perspiration. It was 6:00 P.M., and his bad leg was starting to give out on him. Then he had a flash of thought, Could the name have been spelled differently? Was it Cohen, Cohan, Cohn, Kohn, or Coen? He went back to the art shop: It was spelled Cohn's Art Shop. He went back to the phone booth and began calling all the Cohns. On the sixth call he was lucky and got the right B. Cohn. The cook who answered the phone said that Mr. Cohn was dining at the house of a Mr. Simons in Mill Valley. There were three Mr. Simons, and Bill called all of them before connecting with the right one. Yes, Mr. Cohn was there, but who wished to speak to him? Mr. Heck? Mr. Lake? A silence followed, then the maid returned, "Mr. Cohn doesn't know any Mr. Lakes and wants to know the nature of the business. "Tell him Mr. Peck wants to speak to him regarding a matter of grave importance." After a frustrating dialogue, Mr. Cohn came to the phone. Bill told him that he had to have the vase by 7:45 p.m. that night and he needed Mr. Cohn to come back across the Bay, open his store, and sell him the vase. Bill was told to contact Mr. Joost. Again, Bill encountered the same kind of run-around as he tried to find Joost at one of several country clubs. He could not find Joost. He borrowed a hammer then hailed a taxi. He was going back to the art store to break the window. But when he reached the shop, there was a policeman standing in front of the store. He left and came back and noticed the sign over the store read B. Cohen's Art Store. He sat down on a fire hydrant and cursed with rage. His weak leg hurt, the stump on his left arm developed a feeling that his missing hand itched. He took the taxi back to the hotel. Hope springing eternally in his breast, he called Mr. Joost, who then after their conversation had to verify with Mr. Cohn the entire story. If Mr. Kek would just wait at the art store, he would come over if the story was accurate. At 9:15 p.m. Herman Joost arrived and brought the policeman along with him for protection, just in case. He opened and retrieved lovingly the blue vase; the cost was two thousand dollars. Bill had ten dollars, and Mr. Joost refused a check. Bill called Mr. Skinner from the company and asked to have two thousand dollars sent down. There was a time lock on the safe and no way to get the money. He tried Mr. Ricks's residence to see if he had the money. He had left for Santa Barbara. He tried everything. Finally he went back to his hotel, got his diamond ring with sapphires set in platinum. It was worth about twenty-five hundred dollars. He left it until he could bring the money. It was too late to catch the train that left at 8:45 p.m. He went to the flying field at Mariner. He got the address of the pilot and awakened him at midnight. They headed south in the moonlight with the vase. An hour and a half later they landed in a field of stubble in the Salinas Valley. He limped to the railroad track; and when the train came he made a torch ' stood between the tracks, and flagged down the train. The train slid to a halt, and the brakeman railed on Bill Peck violently. Bill climbed on board and said he would purchase a ticket. The brakeman said, "That's right, take advantage of your half-portion arm and abuse me. Are you looking for that little old man with the Henry Clay collar and the white muttonchop whiskers?" "I certainly am." "Well, he was looking for you just before we left San Francisco. He asked me if I had seen a one-armed man with a box under his good arm. I'll lead you to him." A prolonged ringing at Mr. Ricks's stateroom door brought the old gentleman to the entrance in his nightshirt.

"Very sorry to have to disturb you, Mr. Ricks," said Bill, "but the fact is there were so many Cohens and Cohns and Cohans and it was such a job to dig up two thousand dollars that I failed to connect with you at 7:45 last night as ordered. It was absolutely impossible for me to accomplish this task in the time limit set; but I was resolved that you would not be disappointed. Here is the vase. The shop wasn't within four blocks of where you thought it was, sir; but I'm sure I found the right vase. It ought to be. It cost enough and was hard enough to get. So it should be a precious gift for your wife or anyone else." Mr. Ricks stared at Bill Peck as if he were looking at a spook. "By all that's wonderful!" he murmured. "We changed the sign on you, we stacked the Cohens on you, and we set a policeman to guard the shop to keep you from breaking the window. We made you dig up two thousand dollars on a Sunday night in a town where you are practically unknown; and, while you missed the 8:00 p.m. train, you overtook it at 2:00 a.m. in the morning and delivered the vase. Come in and rest your poor old game leg, Bill. Brakeman, I am much obliged to you." Bill Peck entered and slumped wearily down on the settee. "So it was a plan?" he croaked, and his voice trembled with rage. "Well, sir, you're an old man, and you've been good to me; so I do not begrudge you your little joke. But, Mr. Ricks, I can't stand things like I could before I was crippled in the war. My leg hurts and my stump hurts and my heart hurts." He paused, choking, and the tears of impotent rage filled his eyes. "You shouldn't treat me that way, sir," he complained presently. "I've been trained not to question orders, even when they seem utterly foolish to me. I've been trained to obey them -on time, if possible; but, if impossible, to obey them anyhow. I've been taught loyalty to my chief, and I'm sorry my chief found it necessary to make a buffoon of me. I haven't had a very good time the past three years, and you can pa-pa-pass your skunk wood and larch rustic and short, odd-length stock to some slacker." At this point Mr. Ricks apologized profusely and let Bill know that he had passed a test that only one other out of fifteen had passed and that the reward was a very highly paid position as the manager of the Shanghai office. By the time Mr. Ricks was through with his apology, Bill Peck had forgotten his rage; but the tears of his recent fury still glistened in his bold blue eyes. "Thank you, sir. I forgive you, and I'll make good in Shanghai." "I know you will, Bill. Now tell me, son, weren't you tempted to quit when you discovered the almost insuperable obstacles I had placed in your way?" "Yes, sir, I was. I wanted to commit suicide before I had finished telephoning all the Cohens in the world. And when I started on the Cohns, well, it was this way, sir. I just couldn't quit because that would have been disloyal to a man I once knew." Who was he?" Cappy Ricks demanded, and there was awe in his voice. "He was my brigadier, and he had a brigade motto: It shall be done. When the divisional commander called him and told him to move forward with his brigade and occupy certain territory, our brigadier would say: 'Very well, sir. It shall be done.' If any officer in his brigade showed signs of shirking his job be-cause it appeared impossible, the brigadier would just look at him once. And then that officer would remember the motto and go and do his job or die trying. "The brigadier once sent for me and ordered me to go out and get a certain German sniper. I'd been pretty lucky-some days. He opened a map and said to me: 'Here's about where he holes up. Go get him, Private Peck.' "Well, Mr. Ricks, I snapped to it and gave him a rifle salute and said, 'Sir, it shall be done. ‘I’ll never forget the look that man gave me. "He came down to the hospital to see me after I'd walked into one of the dustricair 88s. I knew my left wing was a total loss, and I suspected my left leg was about to leave me, and I was downhearted and wanted to die. "He came and bucked me up. He said, 'Why, Private Peck, you aren't half dead. In civilian life you're going to be worth a half a dozen live ones, aren't you?' But I was pretty far

gone, and I told him I didn't believe it; so he gave me a hard look and said, 'Private Peck will do his utmost to recover, and as a starter he will smile.' "Of course, putting it in the form of an order, I had to give him the usual reply as I grinned and said, 'Sir, it shall be done.' "He was quite a man, sir, and his brigade had a soul-his soul." As William Peck told Mr. Ricks the name of the brigadier, Ricks was visibly startled and said, "The brigadier was a candidate for an important job in my employ, and I gave him the test of the blue vase." Then he explained how the brigadier succeeded in getting the vase. Kyne, Peter,: The Go-Getter, Story That Tells You How to Be One. (1921), out of print. Retold by Featherstone, Vaughn J.: Commitment, 1982, Bookcraft, Salt Lake City, Utah, p.3-8.

Self-Check Questions Lesson 1: 1. What percentage of construction projects are finished on time, in budget, within quality standards and in a safe environment? a. 90% b. 75% c. 50% d. 20% 2. a. b.

This course is directed to just commercial construction. True False

a. b. c. d.

Managing risk on a project deals primarily with: business partners stealing which is the main point of the Go-Getter story dealing with uncertainty managing an “S” curve

a. b. c. d.

The Construction Keystone Model demonstrates: whole systems thinking that clients are the center of our business that leadership drives the whole system all the above

3.

4.

5. According to high leverage activities, good business skills are more important than construction skills. a. True b. False 1-d, 2-b, 3-c, 4-d, 5-b

Lesson 1 Quiz: See Blackboard, Assignments, Quizzes.

Assignment 1: Preparing a Project Baseline Plan See Blackboard, Assignments, Assignment #1 Folder and follow instructions.

Lesson 2: Becoming a Project Superintendent Introduction: What does a project superintendent really do? The project superintendent is the construction company’s agent and field representative. Generally all negotiations, agreements and contracts that the superintendent enters into become legal and binding. Being a project superintendent is like having control of your own company committed to the task of building a building. You are it. You are the general on the front line. You either make or break the project. Being a project superintendent is tough business. This lesson provides a residential and commercial construction perspective. Most importantly it offers what project superintendents do to be successful.

Lesson Objectives: At the end of this lesson you should: 1. Be able to describe a superintendent’s basic duties. 2. Know the difference between the superintendent as a leader and a manager. 3. Be able to describe how a superintendent plans, organizes, directs and controls a project. 4. Understand what a typical day is like for a superintendent. 5. Understand four leadership styles of being a project superintendent.

How to Proceed: 1. Read Basic Construction Management, Chapter 1, pg. 11-28; and Construction Jobsite Management, pg. 179-181. 2. Read the Ed Johnson Interview 3. Answer the self-check questions to evaluate your readiness to take quiz 2. 4. When you feel that you are ready, take quiz 2.

Discussion Materials: The Ed Johnson Interview

Ed Johnson is a superintendent for a $30 million dollar commercial construction company. Ed started out as a carpenter laborer in his late teens. He is now 35. He is well respected in the company for being a no-nonsense guy who gets the job done. He has grown through the ranks from being a foreman and now as a superintendent. He typically is entrusted with project’s that are about $2 to $5 million. He is currently the superintendent for a new car dealership, which is

about $4 million. Some students had a chance to interview Ed about what makes him successful. Here is how the interview went: Students: Ed, what do you think has made you successful? Ed: Well it all depends. I guess that I am very organized and I always live about three weeks into the future. Students: What do you mean ‘three weeks in the future’? Ed: I’m sure that all of you have heard of a three-week rolling schedule. After I have prepared to start a new project, and made sure that we are all ready to go, I always look at what exactly has to happen and how I am going to do it three weeks in advance. At three weeks I still have time to make adjustments and changes or solve problems. If I start doing that one or two weeks in advance it is too late. Students: How do you organize and motivate your employees and your sub contractors? Ed: I am very direct with my subs right up front. I do not leave anything to chance or assume that I think I know what they are doing on a certain day. I review the contract with the subs very carefully including: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

insurance requirements, their safety plan and our safety plan, the scope of the work as detailed in the drawings and specifications, their licensing requirements, what meetings they are required to attend, the project schedule and how they fit into the schedule, help them identify how they can best work with other subs, each sub has a quality control checklist, how we communicate on the jobsite, how we solve problems, how we treat each other and the other subs.

Their work is my work. I am like the conductor of an orchestra. A particular subcontractor might be the trombone section. They have got to know their part and when to come in at certain parts of the music. They may have a solo (like the key critical path item on the schedule). So the bottom line is that I make sure that three weeks out they are ready to perform. I try real hard to be a support and help them solve their won problems but I still carry a big stick. I never let them give me their problems. They are still responsible. The best thing that we have done as a company is to develop long-term relationships with our subs. That means that we are working with people who we know from previous jobs. That really helps when you can work with those that you are familiar with and you know how to work together. I think that when subs perform as planned then they are happy and making money. They also know that as a GC we can give them future work. I try to be a straight shooter. When they mess up I tell them, but when they perform well I praise them also. Every sub has their own personality. I will try to do those things that give them some kind of reward that is not monetary. Such as recognizing them in a meeting in front of key people on a project for work well done.

Students: What about your own employees? Ed: Sometimes I think that we set our employees up to fail. We don’t properly prepare them to succeed. I learned long ago that there are six critical items that I must give to (or in other words support) employees to be successful. They are: 1. 2. 3. 4. 5. 6.

Clear definition of what it is we want them to do. Including the necessary drawings and specifications to perform the task. From the baseline plan and estimate, how many people it should take to do the task and how long it should take. Their input into the work is very important, so I will always review the task with the crew foreman first. Make sure that all necessary materials are on site to perform the work. Make sure that all necessary equipment is on site to perform the work. Make sure that all safety training and equipment is in place before the work begins. Ensure that proper quality controls are in place like quality control checklists.

Students: What is your daily schedule like? Ed: Well, I am usually the first one on the site in the morning and the last to leave at night. I walk the site at least twice a day. Once in the afternoon to see if the day has gone as planned. This provides me with good information for moving ahead with tomorrows work. I always walk the site in the morning to see who is there and who isn’t. This also allows me to communicate and give positive feedback to those on the site. I don’t know, but I think that it helps for everyone on the site to see the main man. It tells than that I’m watching and know what is going on. I am also there to coordinate and solve problems. Students: Any last thoughts about being a superintendent? Ed: There is more to do than you have time to do it in. This is my personal preference, but there are three key activities that I do every day. I have learned that if I don’t do these three things then I will not be successful. Maybe that is why I am always the last to leave because I know that I must get these three things done every day no matter what. They are: (1) I set aside at least one hour a day in the morning after I have held morning meetings and communicated with whom ever, for paper work and keeping the paper work going with my project engineer and secretary. (2) In the afternoon I always set aside about an hour to review the three-week rolling schedule and make sure that I have identified any problems and am ahead of the wave instead of being buried by it all the time. (3) As part of the review of the three-week rolling schedule, that is when I do my own personal planner scheduling, do my daily report and track my to-do list. I read in a good book somewhere that being a good superintendent was all about planning, organizing, directing and controlling. This is a continual cycle that I do everyday. (Here is a picture of Ed meeting with the owner of the car dealership to review the work. Does he look happy?)

Self-Check Questions Lesson 2: 1.

The main goal of a project superintendent is to: a. Maximize profits in the long run while maintaining a standard of excellence. b. Maximize “quick buck” profits. c. d.

2. a. b. c. d.

Managing time, cost and quality Show who is the boss Covey defines leadership as: managing people effectively ability to work through other people by winning their respect, confidence and loyalty A “bull-in-the-woods” A born trait

3. In residential construction who is the primary representative of the company to the home owner? a. b. c. d.

sales agent production manager superintendent customer service representative

4. During the planning process, weather is usually only considered during which planning phase? a. quarterly b. monthly c. weekly d. daily e. c and d only 5. What’s in a name? Which one of the following titles conveys the fullness of the responsibility carried by the superintendent? a. project manager b. construction supervisor c. builder d. construction manager answers: 1-a, 2-b, 3-c, 4-e, 5-d

Lesson 2 Quiz: See Blackboard, Assignments, Quizzes.

Lesson 3: Understanding the Project Managers Role in Client Relations Introduction: Successful construction project management is all about relationships. There is not a more important relationship than that of the project manager/superintendent and the client. The project manager/superintendent will spent more time with the client than any one else. Yet, often times that person may be technically competent but may have poor people skills or what we call “soft skills”. In a review of successful construction companies it becomes very clear that much of their success has come from repeat business. This is work that they did not have to compete for but were ‘handed’ because of a friendly, trusting relationship we call client loyalty. In fact most successful construction companies had their start by working for one or two clients that kept them very busy. M. M. Lele in the book, The Customer is Key: Gaining an Unbeatable Advantage Through Customer Service (1987), states: Keeping customers happy is the best defense against competition. The firm that keeps its customers happy is virtually unbeatable. Its customers are more loyal, and they buy more, more often. They're willing to pay more for the firm's products, and they stick with the firm through difficult periods, allowing it time to adapt to change. The commitment to customer service has suffered tremendously over the last thirty years. L. Liswood has stated in the book, Serving Them Right: Innovative and Powerful Customer Retention Strategies (1990): Through procedure manuals, policy guidelines, and computer systems, companies have lost touch with customers and have allowed this 'unholy trinity' to infiltrate the organization and manipulate people's minds until the weakened and submissive organization is at their mercy. No action can be taken and no decisions can be made without first consulting this mighty triumvirate. Customers become fodder for the machine to chew them up and spit out if they do not behave as the system demands. T. Peters and R. Waterman in their historic work entitled: In Search of Excellence: Lessons from America's Best-Run Companies (1982) quote a comment made by Lew Young, who was at the time, Editor and Chief of Business Week. He expressed: Probably the most important management fundamental that is being ignored today is staying close to the customer…in too many companies, the customer has become a bloody nuisance whose unpredictable behavior damages carefully made strategic plans, whose activities mess up computer operations, and who insists that purchased products should work.

Companies that are committed to customer service are successful now and will command the future. Construction contractors that desire to be successful are no different. Contractors must become better skilled in marketing their services and serving their customers if they are to continue to be successful in a very competitive and changing marketplace. Client retention presents an opportunity for contractors to distance themselves from their competition.

Lesson Objectives: At the end of this lesson you should: 6. Learn the basic concepts of client retention. 7. Know the four areas of employee training in customer service. 8. Be able to describe the eight key strategies in developing a client retention system. 9. Know how to deal with angry clients. 10. Be able to explain the “Blueprinting Client Contacts Model”. 11. Understand owners needs.

How to Proceed: (2)

(2) Read and review concepts 1-6 on Client Relations Answer the self-check questions to evaluate your readiness to take quiz 3. (6) When you feel that you are ready, Take quiz 3.

Discussion Material: Concept 1: Understanding Client Retention and Loyalty 1. Conquest vs. Retention Marketing: 75% of today's marketing dollar goes toward finding new clients ($140 billion). American businesses lose 180 million affiliations every year. The average U.S. corporation loses 50% of their customers every five years. 2. Why Clients Defect: 68% of clients defect because of employee indifference to their needs. 14% of clients defect because of product or service dissatisfaction. Too often client patronage is taken for granted. Clients often defect because of misunderstandings or incorrect expectations. 14% of clients defect because of complaints not being cared for. 9% of clients defect because of competition. 9% of clients defect because they moved. 68% of clients defect because of no special reason. 3.

The Effects of Client Defection: 91% will never buy again from that company. Dissatisfied clients will communicate their dissatisfaction to nine other people. One study showed that for large purchases, only 40 to 60% of clients will express their unhappiness. Another study showed that 90% of dissatisfied clients won't exert effort to complain, they just take there business elsewhere. In yet another study, it was shown that for every written complaint there is an average of 27 dissatisfied clients.

4.

Benefits and Potential Losses of Client Retention: 65% of and average company's business comes from satisfied clients. It costs 5 to 7 times as much to acquire a new client as to service an existing one. One research project showed that 100 companies in 12 industries showed that the longer clients stayed the more profitable they became. Another study showed that some companies boosted profits 100% by just retaining 5% more clients. Another study showed that because of company loyalty clients are willing to pay

more for products and services. Yet another study showed that a client who is loyal for four years will generate triple the profits from the first year. Another study showed that if a customer purchases $100 at the supermarket every week, this constant flow of revenue totals $5,200 year, $26,000 over five years, $52,000 over ten years. This clearly shows that satisfying clients retains employees for longer periods of time Concept 2: Construction Markets are Changing 1.

Changes in the market place: Marketing is new for most commercial construction contractors. Construction markets have become more complex with more alternative contracting methods. 1/3 of revenues for the top 400 contractors now comes from designbuild. Professional Builder's annual client satisfaction survey shows that more clients are relying on word-of-mouth recommendations. A leading U.S. home builder accounts for 60% of sales from referrals ($3 billion plus company). There is a major move toward relationship and consultative marketing. There is a move away from the singular focus of the project completion to more of listening and understanding to the needs of the client. Contractors must have competent players on their team that can problem solve, enhance communication and build long-term relationships.

There are four areas of employee (including subcontractors and suppliers) training that are paramount in customer service. 1. Company's commitment to client satisfaction: The company’s client satisfaction plan should be well understood by each employee and what their part and responsibility is. 2. Communication Skills: Each employee should have proper training in the “soft skills” including: listening skills, negotiating skills, telephone skills, verbal and written skills, presentation skills and how to properly manage a meeting. 3. Problem Solving Skills: These include: uncovering and understanding customer needs, how to identify and resolve problems before they become complaints, and measuring customer satisfaction. 4. Presentation training: How to speak before a group of people and deliver a persuasive speech.

Concept 3: The Eight Key Strategies of Successful Client Retention and Loyalty 1. Blueprinting customer contacts: Identify "moments of truth" where clients come in contact with employees and discovering fail points where service is most likely to go wrong. 2. Management service commitment to the client: Quality starts at the top. Companies that have achieved excellence in service have a strong vision and strategy for client service. 3. Employee Client Service Training: Employees should be given the knowledge, skill and authority to solve front line problems. Training should include communication, problem solving, presentation and performing in "moments of truth".

4. Managing a Client Information File: Tracking information about current and past clients' purchasing habits, future needs and other critical issues can be very helpful in identifying, acknowledging and maintaining long-term relationships. 5. Client Feedback: Well-designed client satisfaction surveys can give feedback that ensures that services are correctly focused on issues that are most important to the client. 6. Managing Client Complaints: Having a management system to receive and care for customer complaints can reduce customer defections. 7. Communicating With a Client after a Project is Completed: Effective methods of staying in front of your client may be special events, newsletters and other publications and affinity merchandise (i.e. any item that has your company's name, logo or trade mark). 8. Reclaiming Lost Clients: By searching for the root cause of client departures, companies with the desire to learn can identify business practices that need fixing and some-times, win the client back and reestablish the relationship on firmer ground. Example of Blueprinting Customer Contacts: The following is a flow chart showing how a commercial construction company may implement the blueprinting of customer contacts and the other seven key strategies for client loyalty. Note three of the following elements of the flow chart. (1) Pre- sale marketing and aftermarketing segments are divided by the contract approval and signing. (2) The moments of truth show which participants are involved in the different stages of the of client interaction. Notice that the project managers and superintendents are ranked #2 during the pre-sale proposal stage and ranked #1 during the aftermarketing phase. (3) The line of visibility shows that seven strategies interaction with the model but it is not visible to the client. See Blueprinting Client Contacts (excel file) Concept 4: Seeing the Project Through the Owners’ Eyes

A contractor must see the project through the owners’ eyes before they can begin to understand their needs and how they can be of real value to them. There are ten key activities that an owner is trying to juggle when planning a new project. Only one of those activities involves the contractor.

1. Acquiring the needed real estate at a price and timetable that makes the project possible. 2. Acquiring the needed planning and zoning approvals to obtain a building permit. These may also include permitting from the department of transportation, fire marshal or a myriad of other organizations that are needed to get a building permit.

3. A growing challenge for many owners/developers is the increased demands by city, county and state municipalities to build off-site improvements. This can significantly increase the cost of a project. 4. The architectural design of the project must meet the functional needs of the project along with having a design appeal that that will sell itself. This could be a restaurant that must be planned for laborsaving operational flows for employees and also have customer appeal. McDonald’s and the golden arches perfected this idea in a very profitable way. 5. Owners and developers want to bring projects on-line quicker and at a lower cost. The selection of the appropriate contract method is becoming more popular to meet fasttrack demands. These might include design-build, construction management, or design-build with a guaranteed maximum price. 6. The project must meet a financial bottom-line. Every project has a budget. There is always a point where the project is no longer financially feasible. 7. The owner/developer generally must acquire financing for the project and must adhere to certain financing requirements imposed by the lending institution. 8. The project must fit into a designated schedule. This schedule includes the programming of all activities from initial concept to the project opening. The schedule is extremely important because every owner/developer wants to take advantage of peak sales seasons. An example is a retail store that wants to be open for the winter holiday season. 9. Finding the right contractor that can provide an acceptable cost and deliver the project on time and with the quality that is desired takes time. 10. After a project is completed and the facility is in operation, an owner/developer wants a facility that is trouble-free and will continue to grow in value. Most importantly, the facility should meet the objective that it was planned, designed and built for. Concept 5: Ten Areas Where Project Relationships are Won and Lost 1. Meetings: How shall we conduct meetings? What is an effective meeting? How shall we record and distribute meeting minutes and action items? What can the contractor do to help make the owner’s job easier in this area? 2. Communication and paperwork: What communication does the owner want? What should be written and what should be oral? What is quality written and oral communication? What are high priority communications and what are the time lines? What can the contractor do to help make the owner’s job easier in this area? 3. Payment for work: How should applications for payment be processed? How should change orders be processed? What can the contractor do to help make the owner’s job easier in this area?

4. Problems: What is the process that the owner and contractor will use to solve problems? What can the contractor do to help make the owner’s job easier in this area? 5. Schedule: How does the owner prefer to have the schedule communicated to them? What can the contractor do to help make the owner’s job easier in this area? 6. Quality: How should the quality aspects of the project be coordinated and managed? What can the contractor do to help make the owner’s job easier in this area? 7. Safety: How can the contractor and owner best coordinate all aspects of maintaining a safe work site? What can the contractor do to help make the owner’s job easier in this area? 8. Public Relations: What public relations activities does the owner have planned for the project during construction? How shall the owner and contractor coordinate public relations? What can the contractor do to help make the owner’s job easier in this area? 9. Owner Equipment Coordination: How would the owner like to manage the coordination of owner equipment? What can the contractor do to help make the owner’s job easier in this area? 10. Project Closeout Process: How shall we manage the closeout process to ensure a smooth transition? What can the contractor do to help make the owner’s job easier in this area?

Concept 6: Dealing with Angry Clients When you consider all the things that can go wrong on a construction project it can be overwhelming. That is why it is so important to develop good problem solving skills. A superintendent/project manager spends a majority of their time solving problems. And most of those problems deal with interpersonal interaction and communications. Consider the following 18 suggestions to assist you in developing your problem solving skills. 1. Don't ever get defensive of whatever or whoever is being discussed. 2. Seek to understand before you seek to be understood. (Stephen R. Covey) a. Be a very good listener. b. Don't interrupt them. Listen, listen, listen! You can't listen with your mouth open talking. c. Ask a lot of questions to clarify what the real problem is. d. Anger, frustration, or financial constraints can easily mask the real problem. e. There are usually two sides to every story. f. Don't buy into their story or anyone else's without researching both sides of the issue. g. Don’t assume anything. h. Repeat the concern as you understand it back to the client. Make sure you understand it clearly. 3. Put your personal ego away. Don't take things personally. "He who slings mud . . loses ground." (Chinese Proverb) 4. Keep a smile (not a grin) on your face! Give attention to the seriousness of the problem, but maintain a pleasant, cooperative attitude. 5. Maintain personal control. Everybody loses when you lose control, but mostly you lose. This

will be a challenge but will help your attitude toward achieving your objective - satisfying the client. The mental anguish is the real challenge. 6. Sometimes it is best to let the angry client vent their frustrations. Sometimes it is best to allow the over-angry client to cool down a little. Tell them you will get back to them in an hour. This will allow them and you to calm down and be more reasonable - then they will generally be more inclined to discuss the real problem and obtain an accurate list of concerns. 7. The bottom line is that an angry, frustrated client wants someone (you) to listen to him/ her without defending anyone or being interrupting. 8. Allow plenty of time when writing down a list of complaints. Repeat back the list to make sure it is accurate. 9. Do not apologize for things you don't even know about. Research the problem first. a. Don't ever sell out: i. The Company ii. The Superintendent/Project Manager iii. The Sales Consultant or Marketing Person iv. Another individual 10. Whenever possible make sure the person being discussed is there to defend him/herself. 11. Never surrender authority. a. Simply apologize for their frustration and tell them you will check into the problem and specify a time when you will call them back. b. Ask for all available phone numbers (home, office, beeper, cell phone, fax) so that you can reach them. c. Then do it and get back with them in the specified time. 12. Do not pass judgment until you understand the problem. a. Get help when you need it. b. When researching a problem, go to the source. Do not form opinions or assumptions. 13. Never put client concerns on a back burner. Attack the problem aggressively. 14. Make promises and commitments only after you thoroughly understand the real problem. Under-promise and over-deliver. 15. When resolving an issue, make it a top priority. The quicker you fix the problem, the quicker you restore client confidence. The goal is always to satisfy the client and maintain their confidence. It is the right thing to do. Besides it makes perfect business sense. Referrals come from satisfied clients and builds loyalty. 16. Always follow-up. a. Keep the client updated on progress. b. Follow-up to make sure the problem is resolved. c. Maintain ownership of the problem until it is given to the right person and all parties understand that ownership has been transferred. 17. If a project manager or regional manager is involved, please be sure to follow up with him/her so he/she can follow up also. 18. Be loyal to the client. When asked by others about your angry client, simply answer, "He/She's fine, just a few problems that we need to solve." Be positive and don't make fun of the clients or their concerns.

Self-Check Questions Lesson 3: Self-Check Questions Lesson 3:

1. a. b. c. d.

What is the best defense against competition? lowest prices best looking model home quality policy and procedure manuals keeping customers happy

a. b. c. d.

It costs _____ to _____ times more to acquire a new client as to service an existing one. 1, 2 3, 5 5, 7 8, 10

2.

3. There are four areas of employee training that are paramount in customer service. Uncovering and understanding customer needs comes from what category? a. Companies commitment to client satisfaction b. Communication skills c. Problem solving skills d. Presentation skills 4. Which of the following are not one of the eight key strategies of successful client retention and loyalty? a. Managing payment of work b. Reclaiming lost customers c. Blueprinting customer contacts d. Employee client service training 5.

Considering dealing with angry clients, which of the following statements are false? Never surrender authority. Apologize and tell them you will check into the problem and specify a time when you will call them back. b. Never put the client on the back burner. Attack the problem aggressively. c. The bottom line of an angry client is that they want the superintendent or project manager to tell them what is going on. d. Whenever possible, make sure that the person being discussed is there to defend him/self. a.

(Self-Check answers: 1: d, 2: c, 3: c, 4: a, 5: c)

Lesson 3 Quiz: See Blackboard, Assignments, Quizzes.

Lesson 4: The Project Team and Delivery Systems Introduction: This lesson focuses on the construction project team and the different types of contract delivery methods. Synergy has been described as 1 + 1 = 3. Functioning teams should have the same type of effect. The value of the team as a whole is much more valuable than each individual member. It is important to understand who the players are on the construction team, their roles and responsibilities and the rules that govern the how the game is played. Each different delivery system (contract type to perform the work) carries with it a different set of rules and players. Each system has its advantages and disadvantages. It is important to understand these differences so that you can be successful.

Lesson Objectives: At the end of this lesson you should: 1. Understand the different types of contract delivery systems. 2. Be able to describe the stages of team development. 3. Better understand the roles of the owner, architect and the contractor as team players. 4. Be able to describe and evaluate a project using a stakeholder analysis. 5. Understand how risk is managed with certain contract delivery systems.

How to Proceed: (3) Read and review the discussion materials. (2) Read and review Construction Jobsite Management, chapter 1, pg. 1-26. (7) Answer the self-check questions to evaluate your readiness to take quiz 4. (8) When you feel that you are ready, Take quiz 4.

Discussion Materials: Concept 1: Team Development Team development is an interesting thing. Some years ago I came across a model that has helped me in project management. Though all groups are unique and ever changing they have some common and identifiable variables. Groups and teams usually develop in four progressive steps: Stage 1: Forming – relationships are high and task effectiveness is at its lowest. Stage 2: Storming – relationships bottom out while effectiveness begins to bottom out. Stage 3: Norming – relationships are improving, effectiveness increases slightly. Stage 4: Performing – relationships are high and task effectiveness is high. Consider the following table:

Stages of Team Development Stage 1:

Stage 2:

Stage 3:

High

Stage 4:

Performing

High

Norming

Relationships

Effectiveness

Storming Forming

Low

Low

As your project team comes together there is a pretty good chance that the team will go through this process. You can expect that the initial excitement (honeymoon stage) of the project will quickly rub off and relationships will hit a low. But, over time, the team will begin to come together and the overall effectiveness of the group will increase substantially. During the storming step team members are learning to communicate and work together. I’ve often referred to this as the “learning to dance together” stage. In a later lesson we will address this more deeply. After the first two stages, relationships deepen and usually effectiveness increases. How long does this process take? It depends on how closely the team members work together, the nature of the work and personalities. It is exciting to see a team who like one another and are at a high performance level. There are occasions when teams never get past storming. You may know of some. Concept 2:

Stakeholder Analysis

A stakeholder is anyone who has a vested interest in the project. Unfortunately under a lump sum agreement owner and contractors are at natural odds with each other. The owner wants high quality at the least cost, and the contractor wants to maximize every opportunity for increased profits. These two stakeholders have different interests. Consider the following table that takes at look at the varied stakeholder interests on a project. Stakeholder Analysis Table:

Stakeholder Owner Contactor

Maximize

Time

Cost

Quality

Overall value Profitability

Less time More time

Architect

Design and beauty Life safety and code compliance Financial values and least interruption

Sides with owner Doesn’t care

Least cost Raise price/cut costs Doesn’t want to cut design Doesn’t care

Highest quality Only provide what was bid Highest quality

Less time

Doesn’t care

Regulatory Agency Property Neighbor

Just has to meet code compliance Highest quality, maximize values

Does it surprise anyone why there are project disagreements! Everyone seems to be pulling in different directions. One of the main reasons for the increase in alternative delivery methods is to stop this confrontational approach and get the contractor, owner and architect all working together with the same motives. There also have been advances made in working together with regulatory agencies. The principle of Partnering will be discussed in a future lesson. Concept 3: Delivery Systems and Risk Construction contract delivery methods are all about managing risk. In a lump sum agreement the contractor assumes the greatest risk but may also be more profitable. On the other end of the spectrum the CM contract has almost no risk but also has no opportunity for increased profits. It is interesting to note that architects carry little risk on projects. It is because of this that in many areas of the country architects have been regulated to a reduced role and contractors have now assumed to role of the Master Builder. This is all because of project influence and risk. See the following graph to illustrate this principle.

Managing Risk (Contractors Perspective, Owner would be Reverse) Lump Sum Contract

High Profits $ CM/GMP Contract

CM Contract Low

Degree of Risk

High

Self-Check Questions Lesson 4: 1. In a traditional lump sum contract delivery system, there is a contract between the contractor and the architect. a. true b. false 2.

Cost plus, a GMP is: a. the same as “time and material” b. cost plus a fee, often splitting savings with the owner c. lists of quantities of components, priced per unit d. the most common delivery system

3. a. b. c. d.

You can expect the most problems in team development during: stage 1 stage 2 stage 3 stage 4

4. Most BYU CM majors, who go into commercial construction, start out as a _____________ when they graduate. a. project manager b. contract administrator c. superintendent d. project engineer 5. a. b. c. d.

An architect as a stakeholder wants to maximize: overall value profitability design and beauty life safety and code compliance

(answers: 1-b, 2-b, 3-b, 4-d, 5-c)

Lesson 4 Quiz: See Blackboard, Assignments, Quizzes.

Lesson 5: Commercial Project Preparation and Reviewing Construction Documents Introduction: Preparation for a project is a critical activity. In a previous lesson we have discussed the preparation of a project baseline plan and how to measure progress of time and money. This lesson goes into more detail as to the reviewing of the construction drawings and specifications (project manual). It also provides an example of how a project manager or superintendent would review drawings and specifications in preparation for starting a new project. In future lessons we will discuss reading, writing and understanding contracts, budgeting and cost controls, productivity and jobsite layout and quality control preparation.

Lesson Objectives: At the end of this lesson you should: 6. Understand the seven areas that project managers manage. 7. Know how to complete a Project Risk Assessment Worksheet 8. Be able to review a project manual and understand how to use it to administer the project. 9. Know how to review drawings in preparation for construction. 10. Understand how during work right the first time can solve future problems. 11. After completion of assignment 2, be able to critically analyze a project from 17 different viewpoints and be able to write a Project Risk Assessment from the planning stage to the recording of the outcome of the actual project. This ‘real world’ simulation will help prepare you for better project planning and modeling problem solving skills.

How to Proceed: (4) Read and review the discussion materials. (2) Read and review Construction Jobsite Management, Chapter 2, pg. 27-54. (9) Become familiar with the AIA Document A 201, General Conditions of the Contract for Construction found in the Appendix in Construction Jobsite Management, pg. 401-426. (10)Answer the self-check questions to evaluate your readiness to take quiz 5. (11)When you feel that you are ready, Take quiz 5. (12)Read, review and complete assignment 2.

Discussion Materials: Concept 1: Project Risk Assessment Remember our project superintendent Ed Johnson?

Let’s see how he prepares to start a new commercial project. Ed has realized from experience that he has seven areas of major responsibility. These areas are: • • • • • •

Time (schedule) Cost (budget and project profitability) Quality (as specified in the construction documents) Safety (as required by law) Relationships (communication with all the stakeholders for the project) Customer Satisfaction (getting repeat business and referrals for good work)

•

Risk Management (Dealing with unseen problems early)

As Ed begins the project review process he creates an overall risk analysis worksheet for the project that helps him determine possible problems that he might incur and what opportunities that he might take advantage of. Consider the following example. When Ed began the review of the car dealership he

discovered the following information:

Time: The schedule was planned to start in the fall and conclude in the spring. There where weather days included in the schedule. The project was delayed and is not going to start until the spring. Strength: better weather, Opportunity: pick up days due to better weather 1.

2. Cost: The estimator guessed on a few line items in the budget. There looks to be a $5,000 short fall in the budget. Weakness: budget short, Threat: over budget. 3. Quality: Ed is having a difficult time finding a particular brick that is specified. Weakness: brick not available, Threat: may affect time and budget. 4. Safety: Ed is well trained in safety and all of his past projects have had an excellent safety record. Strength: know regulations, Opportunity: could save time and budget.

5. Relationships: The project architect is known for being tough to get along with. Weakness: difficult architect, Threat: could affect time and budget.

6. Customer Satisfaction: The customer is pretty demanding but Ed is up to the challenge. Ed needs to get to know the customer better to ensure that he hits his hot buttons. Strength: ability to understand customer, Opportunity: Ed needs to get to know the customer better. Given this example, review the following Project Risk Assessment Worksheet. Car Dealership

Time

Strength better weather

pick up days due to better weather

know regulations

over budget may affect time, budget, quality could save time on budget

difficult architect

Relationships Customer Satisfaction

Opportunity Threat

budget short brick not available

Cost Quality Safety

Weakness

ability to understand customer

could affect time and budget

get to know the customer better

Concept 2: Understanding the Administration of the Contract It is important to understand the organization of the contract documents and how to use them. This is how Ed does it. 1. Ed has a good understanding of the AIA A201 General Conditions of the Contract. He knows that the 14 articles in the document set the foundation for construction contract law. 2. Ed reviews the Supplemental Instructions to review those times that are specific to his project that modify the AIA A201 General Conditions of the Contract. He makes notes of all of the changes. 3. Next, Ed is very interested in studying Division 1, General Requirements because it is the section that describes how the project is to be administered. This section outlines all general requirements that he must carry out. (page 39 of Construction Jobsite Management provides a good outline of division 1 requirements) 4. Ed then begins to review Divisions 2-16. He looks at each division and section carefully. He knows that Part 1, General, of each section is a more specific extension of the administrative direction given in Division 1. For example in Division 1 outlines the general procedure for submitting shop drawings. In Part 1 of any section it specifically describes what shop drawings

should be submitted and any other specifics pertaining to that specific section. (I don’t know how to be more specific about specifics!) Ed also reviews Part 2, Products of each section which describes what materials are required for each section. Then he reviews Part 3, Execution which describes how the materials are to be installed or “put into place”. Concept 3: Reviewing the Drawings and Project Manual (Specifications) 1. Ed will usually follow the seven steps described on page 48, Familiarization With the Project. 2. Ed will usually take the drawings apart and put them on a “stick” and hang them in a plan rack. (See page 42 as to how to divide up the drawings.) He will prepare “His” set of drawings for the job trailer, which are marked and cross-referenced to the project manual. He may even cut out sections of the project manual and paste them to the appropriate drawing pages tot help clarify and describe how the project is to be built. 6. What is Ed looking for? He is looking for any incomplete drawing or specification that will stop him from building any certain part of the project. He usually takes a pad of paper and begins to make a list of items to be clarified by the architect or engineer. Contractors are trained to build from blue lines (drawings) and specification (project manual) descriptions. When those blue lines and descriptions don’t adequately describe what materials are used and how something is to be installed then he needs clarification. Ed knows from experience that there is no

such thing as a complete set of drawings and specifications and that there will always need to be many clarifications.

Concept 4: Potential Problem Solving Ed wants visit the site of the project early on and identify any potential problems. He will review the geotechnical and soil reports to discover any subsurface problems. He will walk the site and look for any sign of any thing that could become a problem. It may be overhead power lines, utility easements, spring runoff ditches, and beaver and alligators living on the site. (These are all true, I’ve had them all.) Beware and don’t assume that reports in the project manual are complete. Reports don’t always give you the whole story.

In future lessons we will begin to outline important principles of Total Quality Management (TQM). TQM starts right here. It is doing work right the first time so that you can avoid problems later. There is a very important principle that you should learn from this lesson. The principle is called the Distance Principle of Problem Solving. It says this:

If you can see a potential problem from a distance you can generally make changes now at little cost, or loss of time, but, the closer you get to the problem the more it will cost to solve and you will lose more time in solving it. This is what project preparation is all about!

Self-Check Questions Lesson 5: 1. The contractor is obligated to comply with codes and regulations even if they are not specified or referenced in the construction documents. a. true b. false 2.

The difference between engineering drawings from architectural drawings is that: a. engineering scale is graduated in 1/10 of a foot b. they are the same c. recommended by the AIA d. engineering scale is ¼” = 1’0”

3.

An example of supplementary conditions is: a. A201 requires builders risk insurance be carried by the owner, this is changed to the contractor b. Change A201 from arbitration to court litigation c. Change A201 from no monetary level of insurance to $1,000,000 d. All the above

4. A finish carpenter wants to review the project manual and drawings. What CSI division would you direct him to? a. 5 b. 9 c. 11 d. 13 5.

Preparing crew assignments include what elements: a. site plan review, floor plans, elevations, sections, mechanical b. materials, tools, drawings c. drawings, technical specs, materials list, tolls, estimate information d. materials only

(answers: 1-a, 2-a, 3-d, 4-b, 5-c)

Lesson 5 Quiz: See Blackboard, Assignments, Quizzes.

Assignment 2: The Super Bridge Analysis See Blackboard, Assignments, Homework Assignments and follow instructions.

Lesson 6: Residential Project Preparation Introduction: I often think that construction can be somewhat compared to manufacturing. In manufacturing you work in a nice production facility where you can control an assembly line in almost perfect order. The weather is always ideal, parts and pieces are readily at hand, and work crews have all their tools right there. In construction, we have to dig a hole in the dirt, bring in all of our own tools and labor, battle weather conditions, wait for building materials. What is the difference between these two scenarios? It’s control! In manufacturing we can control so many variables. In construction, we have much less control of the variables. Someone once said that there are over 50,000 elements that go in to a new home. That may be more elements than for many commercial buildings. There must be a lot of coordination and communication with that many elements. This chapter should help you in planning and organizing those elements so that you are prepared to manage the many variables that affect construction. If you are lucky you just may be able to control the variables that will take a typical construction site and create more of a manufacturing environment.

Lesson Objectives: At the end of this lesson you should: 1. Understand the components of a residential preconstruction checklist. 2. Know how to conduct a site meeting and what to look for. 3. Understand and conduct a residential preconstruction meeting. 4. Be able to organize residential construction reports.

How to Proceed: (5) Read and review the discussion materials. (2) Read and review Basic Construction Management, Chapter 2, pg. 29-44. (13)Answer the self-check questions to evaluate your readiness to take quiz 6. (14)When you feel that you are ready, Take quiz 6.

Discussion Materials: It is good that airline pilots are forced to review a checklist every time they fly. Even when they have flown thousands of times it is easy to forget something. One minor checklist item may be very costly or even deadly. Thus the old adage that the dullest pencil is better than the sharpest mind. The following are 11 areas that I have used as a residential pre-construction checklist. It has served me well for many years. The checklist is not necessarily in order. Residential Pre-Construction Project Management Checklist 1. Financing: Obviously, you can’t start construction until the financing is in place. Don’t ever disturb anything on the lot until the construction loan is closed and recorded or you could have lien problems. copy of signed/recorded loan approvals long term loan amount short term loan amount bank draw request requirements/timeline

construction draw forms cost per day for interest bank inspection requirements appraisal 2.

Bookkeeping/Project Reporting: (We will review this in more detail in a future lesson.) contract documents list of sub contractors and suppliers, credit limit, phone, mobile, contact, fax, pager, address, license, insurance list of sub contracts and supplier quotes - coded blank bank draw applications bank construction estimate - coded alpha file of subs and suppliers numeric file by codes of subs and suppliers system for tracking cost estimate, amount committed or spent to date, amount under or over budget in each coded category (variance report) purchase order system, match PO’s to invoices and negotiated prices

3.

Lot: (A more detailed checklist is in the reading.) date purchased legal address property address locate property lines, corner stakes (survey may be required) setback requirements, pull string bluestakes: locate water, sewer, electrical, gas, cable, telephone, irrigation other locate any utilities to proximity to property zoning locate any easements

4. Site/Project Layout: Spending just a little time on jobsite layout can improve the overall productivity of the project. access to site, road and safety issues site constrains, size, shape material laydown area fill area concrete truck lanes vs. pumping security safety, instructions on site temporary electrical temporary water curb/walk/water meter protection sanitary facilities concrete truck cleanup area

temporary lighting garbage/dumpster telephone water meter size winter/weather conditions 5. Possible Inspections (city): Identifying all required inspections by the municipality that you are building in is important to know before the project begins so that you can put them into the schedule. plan review stamped approved plan set footing/setbacks/ufer foundation u/g plumbing/heating/electrical shear panel power to panel rough elec. rough plumbing rough mechanical framing drywall/firewall stucco soils structural - concrete, masonry, grading final temperament (how cooperative are they to work with) 6. Utility Early Order: Identifying and ordering utilities early is very important. Some utilities may have very long lead times. You need this for your schedule. temporary elec. temporary water gas line - gas company gas meter set requirements for permanent elec. permanent elec. permanent telephone cable TV permanent water meter set 7. Project CPM schedule: The following are critical elements to the schedule. Note the five milestones. The completion of each milestone is carefully scheduled, monitored and never missed. Milestones: (1) concrete complete, backfilled, ready to frame

(2) project dried-in with windows, doors (3) HVAC, plumbing, electrical, gas, cable, telephone, computer, vacuum, 4-way inspection

speakers,

(4) drywall, finish carpentry, painting (5) cabinets, hardware, other finishes, flooring, final inspection municipality, bank inspections buyer product selection, order lead times time of year/weather conditions 8. Buyer selection/option items: Right up front the contractor and buyer must have a clear idea what products are going into the house. This is very important to the home buyers. Many larger builders have a design center that helps buyers with color selection and coordination. Be very careful about suggesting colors that you like! It could get you in trouble if once it is up and they don’t like it. Know the budget and allowance and whether or no there is even a choice option. Keep a record of the selections and have the home buyer sign their approval. The following is a common list. brick style and color stucco style and color rock color and style siding /soffit/facia/gutter style and color shingles style and color paint colors railing style and color interior/exterior lighting selection plumbing fixture style and color appliances style and color floor covering style and color door, window style and color hardware style and color insulation ratings HVAC selection finish carpentry trim style tile style and color counter tops style and color specialty items color and style fireplace style and color 9. Quality Control Checklist: You will be seeing quality control checklists in your sleep before this course is over. concrete framing

windows/doors exterior dry-in drywall finish carpentry other finishes 10. Drawings and Specifications: The general and sub contractors need adequate drawings and specifications in order to perform their work correctly. complete set of corrected plans plot plan detail drawings MEC Check report code compliance other required drawings 11. Meetings and Correspondence: As mentioned earlier, coordination and communication is what project managers must very well. negotiate lot purchase from seller mortgage - long term loan bank - short term construction financing home buyer city building permit approval, inspections city utility connections other utilities sub contractors material suppliers

Self-Check Questions Lesson 6: 1. a. b. c. d.

How many CPM milestones does the residential checklist suggest? 3 4 5 6

2. Which of the following would not be a progress report? a. communication with homeowner b. solving problems with homeowners and sub contractors c. buyer profile questionnaire d. information for subs and suppliers 3. a. b. c. d. e.

Who attends the site meeting? contractor sub contractors buyer city inspector a and b

f. 4.

a and c

a. b.

Taking and distributing minutes of the preconstruction meeting is a good idea. true false

a. b.

You don’t want to give a copy of the schedule to the home buyer. true false

5.

(answers: 1-c, 2-c, 3-f, 4-a, 5-a)

Lesson 6 Quiz: See Blackboard, Assignments, Quizzes.

Lesson 7: Residential Cost Controls Introduction: Controlling money has never been easy. This is especially true with project management. Job cost management is as much an art as a science. In this lesson you will learn some basic skills in creating a budget, tracking costs and reviewing variance reports. You will also learn how to project potential budget problems deal with those problems early. You will learn a job cost model that you will be able to create and use on any construction project.

Lesson Objectives: At the end of this lesson you should: 1. Be able to understand the principles and acronyms of the job cost model. 2. Be able to calculate totals using the job cost model. 3. Be able to recognize job cost coding. 4. Understand job cost forecasting tools. 5. Understand basic residential budgeting and variance reports. 6. Understand material control and value engineering. 7. Be able to explain a purchase order system and its benefits. 8. Understand actions to avoid budget variances.

How to Proceed: (6) Read and review the discussion materials. (2) Read and review Basic Construction Management, Chapter 4, pg. 61-76. (15)Answer the self-check questions to evaluate your readiness to take quiz 7. (16)When you feel that you are ready, Take quiz 7.

Discussion Materials: Concept 1: The Job Cost Accounting Model, Understanding Committed Costs There are many different job cost accounting models. Chapter 4 of the reading presents a standard approach to residential budgeting, cost control and variance reporting. I am going to share with you an approach that works well for both residential and commercial cost control. I have used this system in the construction of over $150 million in new construction. Prolog is a computerized project control software. Prolog is similar to this model. You will be learning Prolog in a later lesson. I believe that it is important to be able to understand and create a job cost system from scratch using a simple spreadsheet. If you can create the system you will understand it much better. You will also be able to understand more complex job costing systems. Consider the following: When you start a project you should have a budget. In fact you should have a budget broken down into many smaller budgets. Banks sometimes will have their own budget codes in residential construction. Banks sometimes call the budget sheet the cost breakdown or building estimate. I really prefer using the Constructions Specifications Institute (CSI) MasterFormat coding system for both residential and commercial/industrial construction. Once you understand the 16 Divisions and coding system it really works quite well and is understood by many in the

industry. (Here’s a hint, if you still have that big book you bought, go to the key word index and look for key words that best describe your budget line items.) Let’s suppose that one of your line items is for masonry and you select the CSI code number of 4200, (Division 4 Masonry). As you establish your budget (in commercial these are called Schedule of Values or SOV) you review your estimate rollup sheet and determine that your budget (or SOV) for masonry is $34,000. As you are preparing to start this new project, you want to sign up (meaning sign a contract) all of your sub contractors and suppliers that bid or other-wise gave you pricing for the project. This is often called “buying out the project”. You review the masonry bid from B & B Masonry. Their bid was $30,000. As you read their proposal there are a few items that you as the general contractor must provide that they are not providing. For our example lets say that it is the steel lintels that go over the windows and doors to carry the brick. The estimator (maybe that’s you) determined that the cost of lintels would be $1,800. So you call Bob from B & B and the two of you get together and negotiate and sign a contract for $30,000. So how do you account for the budget, the contract that you just committed to the budget and the extra $1,800 you will have to spent for the lintels? The Job Cost Model (JCM): You want a job costing system that not only will accurately account for your budget, and what you have spent against that budget (a variance) but also what you are still committed to spend in the future and other potential costs that you are beginning to see creep into the costs of the project. There are four components to the Job Cost Model. The budget that simple shows the dollars available for specific line items, the amount committed that reports all amounts committed to a certain line item whether or not dollars have actually been spent in the line item, the variance that is the difference between the budget and committed costs and the spent category that reports actual dollars spent, actual dollars left and the percentage of dollars spent for the period to date.

The Job Cost Model looks like this:

Budget CSI Code SOV

4200 $34,000

(masonry CSI code) (Schedule of Values, line item budget)

$30,000

(subcontract to B & B Masonry)

$2,000

(Estimate to Finish, window/door lintels)

$1,000

(Potential Change Order, B & B claim)

$33,000

(Expected Total)

$34,000

(Amount Committed Variance) (Schedule of Values)

$33,000

(Expected Total)

$1,000

(Variance)

$7,500 $26,500 22.06%

(Dollars Spent Variance Report) (Dollars Spent, Project to Date, negotiated) (Dollars Left, Project to Date, SOV-DS) (Percent Spent, Project to Date, DS/SOV)

AC-Amount Committed SC + ETF + PCO = ET

AC-Variance SOV ET = VAR

D-Spent Variance DS DL PS

Here is how the model works: The budget for masonry (4200) is $34,000. The goal is to keep committed costs less than the budgeted costs. If committed costs are greater than the budgeted costs, you are over budget, meaning, that you are going to lose money for this line item. Budgeted costs should be equal or less than AC: Amount Committed plus ETF (Estimate to Finish) and PCO (Potential Change Order). This is totaled in ET (Expected Totals) then deducted in AC-Variance. This variance is much more important than the D-Spent Variance because it includes projected dollars to be spent. Lets define the JCM acronyms: JCM: Job Cost Model Code: CSI line item number following the MasterFormat. SOV: Schedule of Values or in other words the line item budget. AC: Amounted Committed by signing a contract or issuing a purchase order or some other method that commits the line item to a certain dollar amount. ETF: Estimate to Finish may come from misc. items not covered in a sub contract or it may be unexpected costs that are truly the cost to the general contractor.

PCO: Potential Change Order may be costs that you feel are in question and are not the responsibility of the general contractor. This is a cost that is under negotiation and may be the cost of the owner or a sub contractor. PCO lets you put it in a place where it will not be forgotten until negotiations can take place. ET: Expected Total, Total of adding SCPOLO (SC:subcontract, PO:Purchase Order, L:Labor, or O:Other debit against the SOV)+EFT+PCO AC-Variance: Amount committed subtracted from the line item budget. This is a better variance report because it includes ETF and PCO projected costs. D-Spent Variance: This is the typical variance report that show actual dollars spent. DS: Dollars Spent is actual money paid to date for the line item. DL: Dollars Left is the actual money left in the line item account. PS: Percent Spent is the percentage of the budget that has actually been spent to date. This is helpful to determine as a check that if the percentage spent seems to be equal to the percentage that is complete for the line item. If the percentage is too high then you may have a problem. There are a few numbers in the model that you do not recognize. Assume that construction has begun and you are now two months into the project. ETF of $2,000 is the planned cost of the $1,800 for the lintels plus an additional $200 for potential minor overruns that you are anticipating. The PCO of $1,000 is for extra work that B & B Masonry wants to charge because they did extra work that was not clear on the drawing. You are preparing to present this to the owner for a change order. B & B masonry did not start of the project until the beginning of month two of the project. You received and approve the first payment (or draw) of their contract of $7500. This is a negotiated amount. So what does the model tell us? First and most importantly is that the line item 4200 only has about $1,000 of cushion left in it. It is hopeful that you can get the additional $1,000 of the PCO either approved by the owner or get B & B Masonry to back off their request. All seems to be going pretty well with the masonry budget line but there is not any extra room in case of any problems. Now, if you only looked at the dollars spent and the amount left in the line item to spent, would you have gotten the same information? Not even close! That is why it is so important to have a job costing system that allows for committed costs in addition to variance reports that just show what has been spent. ETF and PCO are two excellent job cost forecasting tools that are included into the JCM that provide a much better picture for better job cost management. Self-check question 5 lets you work through a problem. There is one similar problem in the Quiz. Concept 2: Job Cost Account Coding Now that you have an understanding of budget line item setup and how costs are shown as either committed or actual payments are made, lets look at how entries can flow into the model. There are basically three ways that you can spend against the budget line item. They are:

SC - Sub Contract, You can write a sub contract. PO - Purchase Order, You can write a purchase order for generally materials or purchasing or renting equipment. L - Labor, You can hire your own employees or temporary help to perform labor on the project. O - Other, is for other unforeseen financial purchases or commitments that don’t come through the above three methods. This is really a catch-all for mistakes made in the sub contracting and purchasing system. (Put this all together it spells SCPOLO. I call this the sick polo method!) So whenever you want to charge anything against a line item there is a transaction coding process that takes place. Every SC, PO, L and O is coded with a number that means something. The code looks like this: (example: 016-2002-SC-4200) Job Number, example 016 (This would be job #16 for that year or accounting period.) Year, example 2002 (This would be the year that the job started. This is important because it can get very confusing from year to year. Some companies just continue to number their jobs year after year. One company I worked with was on job number 228 after eight years.) Type of Debit, example SC, PO, L, O (This describes what type of instrument was used to charge against the line item.) CSI Code, 4200 (This then identifies the exact line item that needs to be charged.) So, does this code (016-2002-SC-4200) make a lot more sense? How this works is that different levels of employees have authority to commit the company (purchase SC, PO, L, O). Superintendents may have a $5,000 level authority, and project manager a $10,000 level authority etc. The truth is that generally every contract must be approved by a contract administrator at the main office and only certain people are approved to issue purchase orders. Often it comes through a central purchasing agent at the main office. The general rule is that any paper work such as a SC, PO, L, O will not be processed in any accounting system without the proper signature approval and the correct coding. Also, generally no one is approved to request funds above the approved line item unless it is approved and signed by a vice president or president. They want to know about what we call “budget busts” before and not after they happen. So what about ETF’s (Estimate to Finish) and PCO’s (Potential Change Order)? They do not fit into a job cost accounting system because they are only estimates. I would suggest that these planning estimates be used in the Job Cost reporting system. I do not include them in the accounting numbers that are given to the accountants but they are included in all management reports. In the corporate business world, a business unit is often asked to project future costs for a certain period. It is called a flash report. That is what we are doing here is projecting future costs for a certain period. This model is a little complicated. I suggest that you spent a little time in getting to understand it. We will be building upon it in lesson 8 and using it in assignment 3.

Self-Check Questions Lesson 7: 1.

The Chart of Accounts and the Schedule of Values are essentially the same thing? a. true b. false

2. Providing proper storage and care, scheduling deliveries and ensuring accurate contracts are part of which superintendent responsibility? a. variance analysis b. labor cost control c. VPO d. Material control 3. a. b. c. d. 4. it:

The purpose of OVE is to: evaluate the least costly method without sacrificing quality or function gather information ensure accurate contracts method of handling deliveries The significance of the committed costs section of the job cost accounting model is that

a. b. c. d.

provides excellent budget variance data is not significant identifies projected costs to finish and potential budget problems it is a DC

5. If a budget line item code 4200 had an SOV of $50,000, a SC of $40,000, a ETF of $5,000, a PCO of $1,000 and the SC had been paid 25% project-to-date, what is the ET and the DS? a. b. c. d.

$40,000 and $30,000 $50,000 and $10,000 $46,000 and $10,000 $45,000 and $25,000

(answers: 1-a, 2-d, 3-a, 4-c, 5-c)

Lesson 7 Quiz: See Blackboard, Assignments, Quizzes.

Lesson 8: Commercial Cost Controls Introduction: Never, never forget the main purpose of being in business is to make a profit. (Notice that I did not say the only reason but profit is the main reason.) Commercial job cost accounting is very similar to residential job cost accounting. In fact I use the exact same system for both. In this lesson you will learn how to plan and project profits and how they are part of the business plan of the company. You will learn how to calculate how much profit you must bill for every month in order to meet the company’s expectations. You will study several spreadsheets that will help you understand how progress payments are planned and how profits are realized. You will also study how to create and read a job cost general ledger and how to use the ledger in the job cost model to provide you with critical financial information for better management.

Lesson Objectives: At the end of this lesson you should: 1. Learn how profit and overhead can be loaded into an SOV budget. 2. Learn how detailed SOV budgets need to be for the best job cost management. 3. Learn what is typically part of overhead and profit. 4. Be able to describe when unit price contracts are used. 5. Be able to create and explain a project cash flow projection worksheet. 6. Understand the value of collecting historical labor data. 7. Be able to calculate monthly profit and overhead billings to meet company demands. 8. Be able to read and interpret a job cost general ledger and transfer the information to the job cost model to review project financial performance and identify any problem areas.

How to Proceed: (7) Read and review the discussion materials. (2) Read and review Construction Jobsite Management, Chapter 14, pg. 349-368, Chapter 11, 293-297. (17)Answer the self-check questions to evaluate your readiness to take quiz 8. (18)When you feel that you are ready, Take quiz 8.

Discussion Materials: Concept 1: Managing the Bottom Line - Profit It is important to remember that through the entire job costing process that there is a great underlining expectation to be profitable and make money every month. The home office needs to make money to pay its overhead and the project needs to pay for its overhead including mobilization and general conditions. The company always has plans for how much it needs to bring in for these overhead costs. Consider the following small company, the ABC Construction Company. Two brothers are partners in the company. They are commercial general contractors. They have four other employees. All other workers are sub contractors. Their home office monthly costs look like this: What John- owner/estimator

Monthly Amount $6750

Description $60,000 annual salary plus

James – owner/project management Jane-Secretary/office manager Henry-Project Manager You-Project Manager

$6750 $4500 $5625 $5625

David-Superintendent

$4950

Office/warehouse Office supplies Telephone/fax/mobile Trucks/equipment Misc/Insurance etc. Total

$4166 $2000 $3000 $2000 $2000 $47,366

35% benefits $60,000 annual salary plus 35% benefits $40,000 annual salary plus 35% benefits $50,000 annual salary plus 35% benefits $50,000 annual salary plus 35% benefits $44,000 annual salary plus 35% benefits Lease payment, 15,000 SF Paper, copier etc. Communication costs Company owned

They are committed to $47, 366 per month regardless or not if they bring any money in. Their pro forma (profit plan) for the year looks like this: Strategic Plan: $10 million in business this year 10% profit margin average on all work completed. This would be $1,000,000 annually to cover monthly overhead expenses ($83,333 per month)

If they can accomplish this goal they would make an additional $35,967 per month that would go to owner profit and maybe employee bonuses. If these number held true then total home office costs would be $568,392 less total profit income of $1,000,000 so the additional profit of $431,609 could be earned. (It should be mentioned that the $47,366 or $568,392 annualized would be the breakeven point.) Tactical Plan: So, how do we get there? The goal on a monthly basis is to earn $83,333 per month. It is determined that this amount must come from each project manager. There are three project managers so it is divided evenly with each responsible for 1/3. So 1/3 or .33% of $83,333 is $27,499 per month. Since you are a project manager you must bring home to the company $27,499. This also means that if your average project has a 10% profit margin in it then every month you must complete and bill for $274,998. This may come from one project or from several

projects. Profit does not flow so evenly. At the minimum, how much must you bill for every month to just break even?

(If $47,366 is the home office break even amount, times by .33 for your share = $15,630 would be your amount. If you can maintain a 10% margin then you must bill $156,307 per month.) So what does all this mean when it comes to scheduling and studying your schedule of values? You have go to find a way to get the work done and bill for the work done so that your company strategic goals can be met. If those goals are not met you had better believe that one of the brothers would want to find out why. Concept 2: Planning Your Project Profitability Let’s suppose that you are assigned a project that has already been going for a month. You show up to the job trailer and find that the SOV has been set but no one else has any idea as to where the project is financially. All that there is is a big pile of contracts, purchase orders, and labor time records in an in-basket. So let’s begin. You find the following: Job Name: Subway Sandwiches – Lexington, General AIA 101 Lump Sum Contract for $421,601. (We often call this the prime contract or PC.) Job Number: 005-2XXX Start date: 2/02/2XXX (notice to proceed date) Project Schedule: 120 calendar days (4 months) SOV: Project Totals $421,601 1 12000 2 18000 3 23000 4 15700 5 6000 6 58000 7 16000 8 24000 9 43200 10 13300 11 34900 12 34000 13 8000 14 3500 15 67000 16 45000 Desired Profit Margin: 10%, or $42,601, cost loaded evenly in every Division.

Billing Schedule: You expect to complete each division 25% each month for 4 months. (To keep this example simple we are doing equal percentage billing each month for each division. This will not usually be the case.) An example is that Division 1; General Requirements has a SOV of $12,000. You will bill 25% ($3,000) of $12,000 every month for 4 months. Profit Loading: The profit is evenly distributed among the 16 Divisions. This means that Division 1, $12,000, that 10% of that amount is a profit of $1,200. The profit will be realized by billing the job 4 times at the end of each of the 4 months, thus the 25%. So, month 1, $1,200 x .25 = $300, month 2, $1,200 x.25=$300, month 3, $1,200 x.25=$300, month 4, $1,200 x.25=$300. Thus the total profit for the four months from Division 1 is $1,200. Are you lost yet? To better help you understand I have gone ahead and put this all together in a spreadsheet. See file Lesson 8 Subway Project Projections and Job Cost Model.xls You would prepare such an analysis to help you prepare to control the project. After you have looked at the Subway file you will notice the following information: 1. Your monthly billing should be $105,400, thus your monthly profit billing (10%) will be $10,540. This will go against your monthly quota as we discussed in concept one. 2. The Profit Projection Schedule clearly identifies every line item (Division) so that you can determine if you are on schedule to meet your profit goals. Remember the saying, “When we deal in generalities we generally fail but when we deal in specifics we usually succeed.” This allows us to understand, manage and communicate profit projections for every project. Concept 3: The Job Cost General Ledger and Job Cost Model Remember our Job Cost Model from Lesson 7? We are going to take things just a step further. The General Ledger is simply a chronological record of costs that are being charged to the SOV (schedule of values account numbers). Remember that monies can be spent on a project four different ways; SC-sub contract, PO-purchase order, L-labor and O-other. Let’s go back to that big pile of contracts, purchase orders, and labor time records in an in-basket. You must now perform a transaction analysis to determine where you are with the budget for this first month that you have missed. Almost think of this as a game. You start going through the pile and entering them into the General Ledger. Here is how it looks: Date 2-2-2XXX 2-3-2XXX 2-3-2XXX 2-6-2XXX

Debit Type PC PO PO SC

CSI Code

Company Code

Amount

Prime 1 1 2

05-2XXX-PC1 05-2XXX-PO1-1 05-2XXX-PO2-1 05-2XXX-SC1-2

$421,601 $600 $545 $16,000

2-8-2XXX 2-9-2XXX 2-10-2XXX 2-11-2XXX 2-12-2XXX

SC SC SC PO PCO

3 4 6 6 6

05-2XXX-SC2-3 05-2XXX-SC3-4 05-2XXX-SC4-6 05-2XXX-PO3-6 05-2XXX-PCO1-6

$22,000 $14,700 $55,000 $4,500 $1,300

We won’t show the entire month, but what is this telling us. (By the way the 2XXX means any year in 2000-2999 so this will not be time-dated material). Notice we have a signed prime contract (PC). It is also marked 1 for number one. We have three purchase orders labeled 1-3 so they don’t get mixed up. The PO’s go against division 1 and 6. Four sub contracts have been signed in site work, concrete, masonry and woods (framing). So it looks like the initial sub contractors are off and going. You will be starting to keep a log of all PC, PO, SC and PCO and others so that you can find them quickly and track them judiciously. (When we get into the software, you will learn how Prolog which means, you guessed it, professional logging of documents, does this automatically). Here is what the Job Cost Model would look like: See file Lesson 8 Subway Project Projections and Job Cost Model.xls From the 9 entries in the job general ledger that are placed in the Job Cost Model we begin to learn some interesting things. Divisions 1-4 are in good shape but we have a bust in 6, framing. With one PO for $4,500and a PCO estimated at $1,300 we are already committed to a negative $2,800. We can go discover why and see what we can do about it. This example begins to show you how to use the General Ledger and the Job Cost Model with a simple spreadsheet. Hopefully these concepts will help you better understand how to effectively track and control any project budget.

Self-Check Questions Lesson 8: 1. a. b. c. d.

Estimating of actual progress will be more accurate by using a: broad-scope SOV a detailed SOV a regular budget a SUV wide body model

a. b.

Owners may assign 1-5% of the contract for punch list items. true false

a. b. c. d.

Reporting labor costs should be narrow enough to: account for labor hours that come from a general labor pool be charged to a SOV account for specific labor hours to specific division SOV’s not be able to account them to any specific division SOV’s

2.

3.

4. If your company strategic plan was to bill $5 million next year, and your average profit margin goal was 7.0% and there were 3 project managers of which you were one of those, if the

responsibility were evenly shared among the project managers, how much must you bill each month individually to meet your goal? a. 8.7% b. 350,000 c. 116,667 d. 175,000 5. a. b. c. d.

The formula for the committed variance is: SC+PO+L+O+ETF+PCO=ET SOV-ET=VAR DS, DL, PS SOV-ET+PCO=ETF

(answers: 1-b, 2-a, 3-c, 4-c, 5-b)

Lesson 8 Quiz: See Blackboard, Assignments, Quizzes.

Lesson 9: Commercial Submittals, Samples and Shop Drawings Introduction: How is it that you can go to Los Angeles and visit a McDonalds and get a Big Mac then get on a plane and fly to Washington D. C. and go to another McDonalds for another Big Mac and have almost the exact same experience? The food looks and tastes the same, and the facility looks and “feels” exactly the same. This “branding” experience at least from the facility side is used by national chains is made possible through the use of submittals, samples and shop drawings. Submittals, samples and shop drawings are used primarily in commercial and industrial construction but may be used in residential if an architectural firm is used to manage the design and control the what types of materials are being used for the project.

Lesson Objectives: At the end of this lesson you should: 1. Understand where to find submittal requirements. 2. Know what a submittal log is and how to use it. 3. Understand how submittals can assist the contractor in construction. 4. Understand the submittal process and how submittals are approved and stamped. 5. Understand how submittals affect the construction schedule. 6. Know the different types of submittals and their purpose.

How to Proceed: (8) Read and review the discussion materials. (2) Read and review Construction Jobsite Management, Chapter 3, pg. 55-74. (19)Answer the self-check questions to evaluate your readiness to take quiz 9. (20)When you feel that you are ready, Take quiz 9.

Discussion Materials: Identifying, processessing and obtaining approvals of submittals is a very important and timeconsuming process. It is very important to understand that submittals are required by the architect or engineer but are actually prepared by the contractor, sub contractor, supplier or fabricator. An example would be the steel erection package for a new retail center. The general steel design is completed by an engineer and can be viewed in the structural section of the drawings and specifications. A steel fabricator and installer will bid on the steel as a subcontractor to the general contractor. The successful steel subcontractor will then negotiate and sign a subcontract. The general contractor and sub contractor will then review what specific requirements are stated in primarily four areas as pertaining to submittals. First and second is the general and supplementary conditions sections that explain the general administration of submittals. Third, is the 1300 section of the general requirements. Fourth, is part 1 (general) of the specific section dealing with the scope of work for the sub contractor. In our case it would be a division 5 section. Within Part 1 it will specifically identify what submittals are required. So now what? It is the responsibility of the sub contractor to take the general engineers design and create actual fabrication drawings (or shop drawings). So what is the difference? The engineer’s drawings provide sizing, connections and weight bearing directions and the shop drawings provide specific details of how the steel package will be manufactured. Now here is the challenge. (Refer to the submittal process flow chart on page 65 of your text.) The shop drawings then move through the approval process to the

general contractor, architect, and then the engineer. If the drawings are approved they are generally stamped - no exceptions taken. (See stamp on page 66.) Then the shop drawings are sent back through the process. Then and only then can the sub contractor begin the fabrication of the steel package. There are two important cautions. First, if fabrication begins before the shops are approved and changes are made, then the sub contractor and maybe the general contractor may be liable for any expended costs. Second, this process can take time. Let's suppose that in week three of your schedule that you plan to start setting steel columns on pier concrete footings. You have three weeks to get the shop drawing completed, then get them approved, then get the steel fabricated, and then delivered to the job site and ready to put into place. Is that a problem? Yes! It is almost impossible. You must start early and be very efficient. To complicate matters, on a large project you may have hundreds of submittals to get approved. The only way to accomplish this is to log the submittals and have someone (which is usually a newly graduated CM student called a project engineer) to track the progress of each submittal. Obviously it is very important to begin early and to work earnestly to identify, process and track submittals. One last note about submittals. The A/E (architect and engineer) often specify equipment that is either outdated, changed model numbers or is no longer being manufactured. The contractor must identify those items early so that the A/E can find an alternative. Often times the contractor will be asked to submit a possible alternative. There is not a lot of reading for this chapter but the principles are very important and sometimes can get a little overwhelming.

Self-Check Questions Lesson 9: 1.

Submittal information is found in section ___________; a. 1000 of general requirements b. 1300 of general requirements c. 1000 of general conditions d. 1700 of general conditions

2.

A submittal log is used to: a. correct inaccurate drawings b. track actual progress of the submittal c. record submittal signatures d. record samples received

3.

Product data submittal is useful to: a. identify size and physical characteristics of a piece of equipment b. located where equipment goes in the building c. understand why the equipment is being used by the owner d. explain how the submittal process works with the A/E

4. It is common to divide submittals into packages i.e. reinforcing steel, in order to expedite the schedule. a. true b. false

5. Submittals can help the contractor to: a. make friends with the architect b. become aware of means and methods of installing certain materials, assemblies and systems c. Create new ideas that can be incorporated by the architect d. Justify change orders (answers: 1-b, 2-b, 3-a, 4-a, 5-b)

Lesson 9 Quiz: See Blackboard, Assignments, Quizzes.

Lesson 10: Record Keeping at the Jobsite Introduction: This lesson is divided into two parts. First is capturing important information at the jobsite. The second is being able to communicate clearly and concisely, both in written form and verbally. This lesson describes report types and content, cost documentation, correspondence, contractual requirement documentation, and meeting minutes. Recording and actually writing a history of the project as it unfolds is usually something that most project managers and superintendents don’t like to do, thus it doesn’t get done. When problems or the need for clarifications occur there is no documentation that supports your position. Thus you spend more time solving problems when it could have been so easy to record an activity or event. Hopefully you will come to discover that record keeping at the jobsite is a key total quality management (TQM) activity that is well worth the effort to implement.

Lesson Objectives: At the end of this lesson you should: 1. Know how to capture project information. 2. Learn what daily reports should include. 3. Understand the key elements to written communication. 4. Understand the key elements to successful meetings. 5. Be able to describe the different logs used at the job site to record important information. 6. Understand how to record and track costs. 7. Understand the important elements of contractual requirement documents.

How to Proceed: (9) Read and review the discussion materials. (2) Read and review Construction Jobsite Management, Chapter 4, pg. 75-111. (21)Answer the self-check questions to evaluate your readiness to take quiz 10. (22)When you feel that you are ready, Take quiz 10.

Discussion Materials: The reading identifies five general areas for jobsite record keeping. I will provide some general comment about the five areas. Concept 1: Report Types and Content Every project is different when it comes to capturing and reporting information. Prolog and other programs are helpful in writing daily reports. The challenge is to take time every day to record daily activities. Since I am from the “old school” I prefer a bound book. If it is bound, then it is a more reliable record and seems to have more validity in court than a computer word processing program or a book that has removable pages. I can take the job record with me and write in it any time that I wish. It is my job journal. I can also keep it hidden away from those who I don’t wish to see it. I really like taking monthly aerial photos of projects for two reasons. First photos don’t lie. I have learned a lot about a project by seeing its monthly progress. The photos have been helped in scheduling. Second, the photos are helpful in public relations with the client (if they are positive), and show evidence of progress. Obviously digital photos can now be emailed to any

customer any where in the world. One step further is to set up a digital camera on site that takes a picture every minute. Deseretbook.com has such a camera showing the construction of the Nauvoo Temple. One last note; I would always video inspections, evidence of work completed for progress payments, any type of problems etc. Video shows show much more than still pictures. The best method with current technology is to videotape and be able to capture still pictures from the video. It was not uncommon to have ten to fifteen hours of video a month on a project. This is a lesson that I learned from OSHA inspectors. They always carry a video camera. A picture is worth a 1,000 words. A videotape can be worth a 1,000,000 words and dollars. Carefully study this section of the reading. It has good examples. I have used all of the examples listed. Concept 2: Cost Documentation Our job cost model (JCM) adequately captures the following information. a. b. c. d. e.

Capturing costs including committed costs to transmit information to the company’s accounting system for disbursement of funds cost accumulated information to control the project’s costs costs for Labor - self performed Coats for material - bill of material, purchase orders Costs for equipment - contractor’s owned equipment, rental equipment

If you do not capture this information who will? We have probably said enough about the job cost model. Concept 3: Correspondence It is not uncommon to send 30 transmittals per day on a large project. This would almost be impossible using conventional letter writing methods. Prolog and similar programs provide a very quick and easy way to perform this task. The trick is to provide simple, to-the-point words that get the message across quickly. Consider the following six interrogatory Words: •Who?

•What? •When? •Where? •Why? •How? Your written communication should always answer these six questions. Suppose that you are sending a transmittal/RFI to a sub contractor to provide pricing for a PCO. It may look like this: Date: January 5, 2XXX (WHEN) To:

Greene Concrete, Josh Greene (WHO) (Address) (WHERE)

Project: Emery High School (WHERE)

RE:

Request to bid potential change order #4 (WHAT)

Dear Josh (WHO), The owner has requested (RFI #12) (WHAT) an estimate for an approximate 120 LF of curb/gutter to expand the southwest parking lot (WHY). Drawings are available at the job trailer on site. Please provide an estimate within 5 days (WHEN) of the date of this transmittal in writing. (HOW) From: Name, Project Manager (WHO) (Address) (WHERE) Here are several ideas to help you in your construction communication. •Schedule a set time to do written communication

•Keep the writing simple using the 6 interrogatory words •Send copies to necessary people and to the job file •Ask: Do you really want to send this correspondence? Written Communication should: •

Help eliminate misunderstandings

•Help clarify your thoughts •Help preserve (document) activities and actions

Concept 4: Contractual Requirement Documentation General conditions, supplemental conditions and general requirements will identify specific documents and correspondence that will be required to complete the contract. The reading adequately identifies these. Typically section 1700 of the general requirements identifies specifically the required documents. We will talk more about this in future lessons. Here is the important thing to learn. You must identify these requirements early in the project and begin to complete them early. I once held a $500,000 retention check on a company for almost four months because the company could not complete their Operations and Maintenance Manuals and Warranties as required in the project manual. It was their total profit plus payment to numerous subs. Concept 5: Meeting Minutes The following is a good checklist for holding an effective construction meeting. It is always a good idea to determine who should attend the meeting and how much the meeting will really cost, given the approximate salaries of each attendee and any lost opportunities that they will have due to being at the meeting. •Title

•Parties in attendance •Minutes from previous meeting •Project progress •Submittals •Change orders •Old business •New business •Meeting adjourned, next meeting •Record of action items •Immediate distribution of minutes Notice that the last two items are probably the most important. These items allow for the action of the meeting to move forward. They also remind participants of actions taken and decisions made. These are very timely and important concepts that will be of great value to you as a project manager or superintendent because you will spend so much of you day performing these tasks. I hope you don’t take these “how to” concepts lightly.

Self-Check Questions Lesson 10: 1. If you had a choice, would you use still pictures or videotape to record events on the job site? a. still pictures b. videotape 2.

The six interrogatory words are: a. who, why, when, they, them, date b. name, whom, project, reference, date, description c. hi, bye, reference, body, date, purpose

d. 3. a. b. c. d.

none of the above Where would you typically find records of conversations? labor reports time-lapse photography telephone logs progress payment requests

4. Daily tracking of labor, material, and equipment is a good practice for both subcontractors and general contractors.. a. true b. false 5. A good practice would be to monthly not pay subs and suppliers unless their contractual requirement documentation is up to date for the period that they are asking to be paid for. (Example: As-built drawings are up-to-date.) a. true b. false (answers: 1-b, 2-d, 3-c, 4-a, 5-a)

Lesson 10 Quiz: See Blackboard, Assignments, Quizzes.

Lesson 11: Jobsite Layout and Productivity Introduction: It seems so obvious and easy to do but in reality jobsite layout and planning for project productivity is poorly practiced except on large projects. This is an area where project managers and superintendents can have a tremendous impact upon the overall success of a project. This is what construction managers are being paid for. Their job is to prepare the jobsite so that the logistics of the project work well together.

Lesson Objectives: At the end of this lesson you should: 1. Understand the components of a jobsite layout plan. 2. Be able to create a jobsite layout. 3. Understand important factors in selecting moving equipment. 4. Identify labor saving layout principles. 5. Learn from examples of delivering materials close to installation points. 6. Learn basic principles of labor productivity. 7. Learn how to create a jobsite sector map and schedule. 8. Understand how to coordinate the delivery and installation of the project equipment.

How to Proceed: (10)Read and review the discussion materials. (2) Read and review Construction Jobsite Management, Chapter 5, pg. 113-148. (23)Answer the self-check questions to evaluate your readiness to take quiz 11. (24)When you feel that you are ready, Take quiz 11.

Discussion Materials: In addition to the reading there are three areas that you should consider when creating a jobsite layout and planning to maximize productivity. They are three basic concepts that need to be addressed. They are: labor productivity, contractor and owner coordination of equipment and creating a jobsite sector map and schedule. Concept 1: Basic Concepts of Labor Productivity As you begin planning for jobsite layout and productivity there are five fundamental principles that you should understand. First is that typically construction labor productivity is divided into three areas. The first area is labor actually working at what is called the work face. Here labor is actually putting materials into place to build the actual structure (workface). Studies have shown that this only constitutes about 33% of labor time. Second, labor spends about 33% of their time performing contributory work. This means walking or traveling to retrieve materials or equipment. The third area is that labor spends the other third of their time doing what is classified as non-productive work. This is considered time that is either not at the work face or contributory.

The second area is height. As a rule of thumb, once labor is working off the ground, their normal productivity is cut by 50%. This is due to required scaffolding, safety requirements and getting materials to the needed spot to be put into place. The third area is weather. The human body is very comfortable at 70 to 75 degrees F. and about 50% humidity, and out of direct sun light. Well how often does that happen? Rarely. Cold and heat can slow down worker productivity along with humidity, rain snow and freezing temperatures. The fourth area is equipment. Labor needs the right equipment to perform certain tasks. They need to know how to use the equipment and be trained in the safe use of the equipment. The fifth area is correct instructions and training. Labor needs to understand the best methods to do the work and be trained in those methods. Picture this: Three workers are working off of ladders installing soffit and fascia approximately 12 feet off the ground. The ground is uneven and the ladders are not settling properly in the dirt. It is 32 degrees, overcast and snowing lightly. The wind is blowing out of the north at about 10 knots thus the wind chill factor is about 15 degrees colder. The material was dumped more than 100 yards away from where the men are working and the only way to get the material to the work face is to load it by hand, piece by piece in the back of a truck and drive it over to the job face. The materials are then unloaded on the ground because the truck has to go back for more. Other labor pick up the material off the ground to be cut to size and then carried up the ladder to be put into place. One worker is driving, loading and unloading the truck. One worker is cutting the material. The other worker is measuring and waiting for the other worker to cut the material. The two workers then move their ladders into place and climb the ladder and attach the soffit and fascia by hand nailing it. What’s wrong with this picture? • • • • • •

Materials are too far from the work face Ground is uneven to work on General lack of the proper equipment, ladders vs. scaffolding, nailing tools, moving equipment etc. Some lack of labor training General lack of pre-planning to perform the task If the weather is too poor, is there other tasks that labor could move to in order to be more productive now until the weather improves

Here is the decision process that the project manager or superintendent has to make. Is it worth the expense or return on investment (ROI) to purchase or rent the equipment verses the current methods? Is it worth it to take the time to create a job activity sheet that defines instructions and directions, material lists, tool lists, allotted labor hours, best practices techniques to be used and safety items needed etc.? On larger projects and repetitive tasks it will be worth it. For small, one time tasks it probably won’t.

Concept 2: Contractor and Owner Coordination of Equipment In a previous lesson we talked about how the submittals, samples, product data sheets and shop drawings can help the contractor identify what equipment will be delivered to the site and how and when the equipment can be installed. Planning for equipment is covered well in the reading. To take the reading one more step, we need to discuss the concept that the contractor nearly always has responsibility for the delivery of the equipment, unloading the equipment, storing the equipment, putting the equipment in place and properly installing and connecting the equipment for operation. The contract documents should clarify those responsibilities. Equipment can come under four different scenarios. They are: • • • •

Contractor provide, Contractor install Contractor provide, Owner install Owner provide, Contractor install Owner provide, Owner install

A schedule of equipment will help to identify which scenario each piece of equipment falls into. Concept 3: Creating a Jobsite Sector Map and Schedule The old adage of “eating an elephant a bit at a time” is what sector mapping is all about. The process is fairly simple. It deal with taking the site plan of the project and dividing it into sectors. This is the mapping portion of the exercise. Each sector is labeled. After reviewing the project schedule, a sector schedule is prepared that explains what is happening in each sector typically every month. Consider the following sector map:

sector

West

North

NW NE 1.1 1 1.2 1.4 1.3 SE SW

2

4

5

3 Building 6

Haul roads

East

Job Trailer

7

8 Egress South Street

9

Queuing Area

Ingress

This jobsite has been divided into 9 sectors. Sector 1 in the top left corner shows how the sector can been subdivided. For example the north east corner of sector 1 could simple be called sector 1 NE. If directions are a little difficult that NE quadrant could be simply referred to as 1.2. The job trailer is located in 8 NE or 8.2. You may notice that sectors 4 and 7 may be used for fill areas and material laydown areas. This is a great tool to help in jobsite layout and planning for increased jobsite productivity.

Self-Check Questions Lesson 11: 1. a. b. c. d.

Haul roads fall into which aspect of a layout plan? jobsite access material handling worker transportation jobsite security

2. Which of the following are not one of the factors in selecting optimum equipment for moving material: a. availability b. protecting storage material c. access to the point of use d. safety 3. a. b. c. d.

A concrete truck has the following load capacity, truck length and vertical clearance: 9 CY, 40 ft., 12’ 22 pallets, 85 ft., 13’ 8 CY, 27 ft., 13’ 15 CY, 63ft., 9’9”

4. When it comes to labor productivity, the reading states that the per minute cost can get very expensive during: a. travel on the site b. workface work c. a the point of delivery d. with certain vehicle traffic patterns 5. a. b. c. d.

Which one of the following are not one of the eight steps in organizing a jobsite layout? data on the size of larger lifting loads (materials) capacity charts for cranes, lifting and conveyance equipment sub contractor storage needs underground and overhead utility locations

(answers: 1-a, 2-b, 3-a, 4-a, 5-e)

Lesson 11 Quiz: See Blackboard, Assignments, Quizzes.

Lesson 12: Computerized Project Management Introduction: There is a large variety of new computer tools for the construction project management industry. Most of these tools are standard practices that have been developed in the past but are now moved to web based applications. This web based application approach has significantly improved project team communication and collaboration. Because of the acceleration of communication and collaboration, projects are getting done quicker and with a higher degree of satisfaction.

Lesson Objectives: At the end of this lesson you should: 1. Be able to describe three different project management software developers and their solution packages and their function. 2. Learn how different software packages are used in construction project management. 3. Learn what to look for when selecting construction project management software. 4. Learn how to begin learning Prolog version 6.0. 5. Learn how digital cameras can be used at the job site.

How to Proceed: (11)Read and review the discussion materials. (2) Read and review, Construction Jobsite Management, Chapter 12, pg. 299-323. (3) Answer the self-check questions to evaluate your readiness to take quiz 12. (4) When you feel that you are ready, Take quiz 12.

Discussion Materials: There are new technologies emerging every day in construction project management. Chapter 12 in the text book is dated on what new application software and hardware is now available on the market but the basic concepts are still the same. Several new applications are now available on the market that are web based with enhanced document and information exchange capabilities. I would like you to be exposed to three different applications that are now available. They are Buzzsaw, Merdian Project Systems (MPS), and Buildtopia. Buzzsaw comes from the standpoint of a web based tool that brings all of the project team players together electronically. MPS has a similar product like Buzzsaw (called ProjectTalk) but their main product is Prolog Manager 6.0 which we will be learning in this course. The third is Buildtopia which is a combination of both types of programs that is used in residential construction. Expedition is another program that functions similar to Prolog Manager and is designed to interface with P3. Unfortunately the program has not received very favorable reviews and has been found difficult to learn. For that reason BYU has chosen to teach their students Prolog Manager. The selection of software solutions is difficult because there are so many systems and software packages to chose from. There are very few solutions that will perform all of the functions needed for project management. Be wary of those “total enterprise” systems that claim that they can do it all. Most of them have built their business in one area such as MPS and Prolog Manager which is the market leader. They then try to bundle other total enterprise products such

as scheduling. Their Prolog Manager is good but their scheduling is so-so. Same with Primavera. P3 is the best program for scheduling but their other solutions like Expedition do not work that well. This is why companies still use a variety of software solutions. The best practice in selecting software is to identify the needs of the company and then find the solutions that best fit those needs. 1.

Buzzsaw

Buzzsaw ( www.buzzsaw.com) was created by a past BYU CM graduate Larry Wares. Buzzsaw was recently purchased by Autodesk. Their web based tool called ProjectPoint allows for real time sharing of documents to enhance communication and team work. The Autodesk® ProjectPoint™ application provides design, construction, and property management teams a better way to collaborate on projects, centralize all project documents and communications in one secure online location and easily control the access for each member of your project team, and share document updates and markups in real time.

Autodesk ProjectPoint is a collaboration service that allows you to store and share your project documents online and then access them from anywhere you have an internet connection -- thus, enhancing team productivity and reducing costs. ProjectPoint delivers an online work environment that seamlessly integrates a secure project hosting service with CAD-related software, tools, and services. This powerful service allows you to connect with your project team regardless of organizational or geographical boundaries. Here is a general outline of their product and service: Centralized Online Project Management o Manage multiple projects online o Maintain a unified project directory Grant tiered access permissions Robust Team Collaboration o

o o o o

View & markup CAD drawings View & markup MicroStation drawings and other file formats Automatically track file versions Email change notifications

o Maintain file-level threaded discussions Easy to Install & Use o Automatic web-based installation & updates o MS ExplorerTM-like interface

Direct URL addressing Standards-based / Open System o Browser-based o Support for all file types o Integrated with AutoCAD o

Xref support Advanced Administration & Reporting o Statistics o

o Detailed Activity Logs High Availability / Security Architecture o SSL - Secure Sockets Layer transactions o Fault tolerant EMC Tier 5 system w/ automatic nightly backups o

Highly secure cage environment

Read the following case study: Buzzsaw Keeps Rapidly Evolving Project on Track The Situation The recently merged Chicago office of HWA/Gensler is an internationally acclaimed architecture, planning, and restoration firm. They began the planning and design phase of the "North Avenue Collection" project last January 2000. A mixed-use project located on the nearnorth side of Chicago, the eight-story building features two levels of high-quality retail space, a multilevel health club, four floors of office space, and a 350-car parking structure. Because of the complexities of the project, Randy Dolph, CIO of HWA/Gensler, saw an opportunity to utilize Buzzsaw™ services. The Challenge In the design phase of the project, explains Mr. Dolph, "the client's needs were changing left and right." The logistics of sharing plans, drawings, and information with more than two dozen team members limited the ability to react quickly. For example, the plans for the upper portion of the building, initially envisioned as an extended-stay hotel and then as a short-stay establishment, were particularly problematic (the client eventually decided to make the upper floors office space). The various uses required very different floor plans, all of which needed to be accessible to team members as quickly as possible. Clearly, the evolving wishes of the client presented a unique challenge to HWA/Gensler. The Solution

One month into the project, HWA/Gensler began using Buzzsaw to exchange AutoCAD ® drawings among the owner, contractor, and consultants. "We turned to Buzzsaw to help us get information to the client and our consultants as rapidly as possible," said Mr. Dolph. As the project evolved, HWA/Gensler expanded the information shared on Buzzsaw to include correspondence, an informational homepage, minutes from weekly project meetings, specifications, building code and zoning issues, and eventually information for future tenants. The Result Enhanced communication, cost savings, and accountability. In Mr. Dolph's estimation, Buzzsaw has definitely facilitated communication among the many team members working on the North Avenue Collection. "By using ProjectPoint™ for posting drawings relevant to future tenants, we've really saved time and reduced our FedEx and messenger costs." Naturally, over the course of a long, complex project, communication can become a great challenge: "Decisions an owner makes can be posted into ProjectPoint, and six months down the road we can easily access the history of that decision." Mr. Dolph believes this has helped the team retain the integrity of information over time. HWA/Gensler's successful use of Buzzsaw services for the North Avenue Collection confirms his prediction and hope: "It's going to take years before the construction industry becomes comfortable with the realities of the paperless office, but Buzzsaw is clearly enhancing communication with our clients and consultants, saving us time and even money." A Central Dashboard for Construction Management Need to know the status of an urgent RFI? The Autodesk® Construction Manager application offers a better way to take control of the construction management process online. Route RFIs, change requests, meeting minutes, and correspondence around your building team, giving each party a private and secure view of only the documents assigned to them.

2.

Meridian Project Systems

Meridian Project Systems (www.MPS.com) has specialized in providing both software-based and ASP-based products with extensive features for complete project control. Once a project is conceived, the MPS Collaboration features are used to manage and record all the planning and design communications. Once the design is complete, the Purchasing Management features divide the design into logical groups (i.e. electrical, structural steel, concrete, etc.), distribute bid packages, and retrieve and analyze bid responses. The Scheduling features enable distributed project teams to efficiently develop and collaborate on their project tasks, resources and costs from any location in the world. The Cost Control features manage all financial aspects of the project, including budgets, contracts, and purchase orders. Additionally, all project-related documents are managed, tracked, and archived for easy distribution and retrieval using the Document Management features. Information from remote locations (i.e. daily reports, safety checklists, punch lists, etc.) is collected and easily managed using the Field Administration features.

Meridian Project Systems' Project Pack Integrated Project Management Solutions for the AEC Industry You can use the Project Pack to manage your projects from a corporate and collaborative perspective. The Project Pack is an integrated suite of project management solutions. With the Project Pack, you can manage project collaboration workflow using Prolog WebSite; perform robust project management with Prolog Manager; analyze global company information through Prolog Executive; manage resources and schedules with Prolog Scheduler; and enter field information in handheld personal computers using Prolog Pocket. The Project Pack allows you to manage both documents and data, creating one central database for all project information. With the Project Pack, you can procure materials and services, manage project budgets, and contracts, track project control data and documents, track schedules and resources, collaborate with your project team through the Internet and analyze corporate information from multiple projects and locations.

GigaPlan Enterprise Collaborative, Web-Based Project and Resource Management for all Industries Meridian Project Systems' GigaPlan Enterprise redefines traditional project management by enabling complete task and resource management in a collaborative, web-based system that you run off your own corporate servers. With GigaPlan Enterprise, all your project teams can create, update and share their schedules online, using a browser and an Internet connection. As an enterprise solution, GigaPlan enables distributed project teams to efficiently develop, manage and collaborate on their project tasks, resources and costs from any location in the world. GigaPlan integrates with Microsoft® Project, Primavera Project Planner® (P3®) and SureTrak Project Manager® to extend existing desktop scheduling to the Internet. ProjectTalk.com Online Project Management and Collaboration Tools for Construction Industries

ProjectTalk is a full-featured online collaboration and project management solution to which users subscribe and access via the Internet. ProjectTalk is used by companies involved in development, planning, engineering, design, procurement, construction and management of facilities. This online service brings together all the necessary products and services for program and project management. Professionals who use ProjectTalk manage projects more efficiently and realize tremendous savings.

MPS Software Meridian Project Systems prides itself on producing the highest quality project management software for construction professionals, owners, developers, architects, engineers, contractors and subcontractors. MPS features a comprehensive lineup of applications to manage projects, oversee portfolios and collaborate interactively on project and scheduling data securely across the Internet. Prolog Manager Prolog Manager has become the standard for project knowledge management in the AEC industry. Prolog Scheduler With Prolog Scheduler, all your project teams can create, update and share their schedules using only a browser. GigaPlan Enterprise GigaPlan Enterprise is a self-hosted solution that allows distributed teams to efficiently manage projects, resources, expenses and documents in a secure environment. GigaPlan solutions are entirely web-native, allowing real-time project management without the need for expensive desktop applications and their associated costs. Prolog WebSite Prolog WebSite is a most powerful Internet-based collaboration solution for project control. This multi-project tool brings every member on the project team together in real time using the Internet. Prolog Executive Prolog Executive lets executives see, query, and compare data from projects located anywhere in the world by aggregating information from multiple project databases into a global database. Prolog Pocket Prolog Pocket is a field data entry tool for the Microsoft® Windows® CE-based Handheld PC and Palm OS®. That integrate critical field management information with your Prolog Manager project database.

MPS Hosted Internet Solution

ProjectTalk.com ProjectTalk.com provides Architectural, Engineering and Construction (AEC) professionals with project and data management applications, e-commerce capability and industry content -- all online. GigaPlan.com With GigaPlan.com, your project teams can create, update and share their schedules online, using a browser and an Internet connection. GigaPlan.com enables distributed project teams to efficiently develop, manage and collaborate on their project tasks, resources and costs from any location in the world.

Other Products Available From MPS Crystal Reports Crystal Reports is a versatile, stand-alone application which is used to create custom reports, lists, and labels from databases.

Read the following Case Study: Bovis Construction Corp. Teams with Meridian Project Systems Founded in 1885, Bovis Construction Corp. stands as one of the oldest and largest companies in the construction world. As a global construction organization offering program management, project management, construction management, and general contracting, Bovis’ best practice philosophy requires detailed documentation on all of its projects.r has Due to the vast amount of detail and documentation necessary to maintain records associated with projects, and the need to standardize throughout the company, Bovis chose to take a corporate approach to its project management needs. The challenge was to provide the operations staff with a progressive and effective tool that met their requirements from a features and functionality standpoint. After detailed evaluations of numerous project management software products, Bovis decided that Meridian Project System’s Prolog Manager replicated the majority of their internal processes, and sup-ported their project management processes very effectively. With Prolog Manager’s capabilities such as, managing contract drawings, submittals, and meeting minutes, Bovis was able to successfully take on challenging projects, including the Carolina Healthcare project, projects for Merck and Co., the Tennessee Oilers Stadium, and certain projects at the San Francisco International Airport. It soon became apparent that Bovis utilized Prolog Manager more and more as new projects were being introduced to Bovis’ portfolio. Bovis currently uses Prolog Manager to manage 7,000 drawings on The Venetian in Las Vegas, Nevada, which once constructed, will be the largest hotel and casino in the world. The project boasts 6,400 rooms and 11,000,000 square feet totaling $1.5 billion. Bovis decided that if Prolog Manager was so powerful and effective in the field, they could use it corporate-wide to insure consistency among the construction divisions. Bovis manages approximately 400 active projects consecutively, with revenues approaching the $2.2 billion range. Due to these corporate commitments, Bovis has become a current user of 900 Prolog Manager licenses, only to solidify the partnership Bovis and Meridian have made with one another. Steve Thomas, Senior Vice President of Information Technology at Bovis states, “Prolog Manager is an effective project management tool that follows generally accepted construction processes with a simple and straightforward user interface. It is also designed with powerful and flexible tools that allow Bovis to customize a unique solution for their projects.” With a full time staff of 2,200 in the US and 5,000 world-wide, it is necessary for Bovis to standardize their project

control solution in order to integrate with the organization’s corporate culture. Standardization of a project control solution will ensure that all employees maximize their capabilities in the field and converse with one another in a uniform manner by utilizing the same features offered with Prolog Manager. By implementing Prolog Manager corporate-wide, Bovis is able to minimize variation of standards to ensure proper controls are in place on projects, thereby ensuring profit-ability. Bovis’ annual construction volume has grown 35% from 1997 to 1998. During this time frame, the operations staff has grown at a lower rate, indicating that more work is being managed with fewer people. This can be attributed to Bovis’ efficiency as an organization, which include standardizing with Prolog Manager. Thomas states, that “Prolog Manager provides us a basic flexible framework in which we have established the Bovis way of solving our project management require-ments. The open standards and flexible tools give us the ability to leverage the Prolog engine into a customized solution to meet our company’s and our client’s needs.” This further confirms the need for corporate-wide software, as well as new and innovative technology. Prolog Manager has a framework of features including purchasing, cost controlling, engineering, and superintending. Prolog Manager also has many global features such as built-in faxing and e-mailing, flexible reporting, powerful security and query functions, built in word processing, and importing and exporting. With all these valuable features, Steve Thomas states, “Prolog Manager has been a great addition to our enterprise application portfolio. Not only is the tool effective and easy for our projects to take advantage of, the people at Meridian are truly committed to providing a world class tool for organizations like Bovis to capitalize on.” 3.

Buildtopia

The BuildTopia (www.buildtopia.com) solution is comprised of nine modules that work together in real-time. Each participant (homebuilder, architect, engineer, vendor, subcontractor, and homebuyer) will see information through their own customized Web page. You will have access to your data through downloads whenever you choose. Nine Modules That Put You in Control 1. Builder Data Library: Enter and view information used throughout the BuildTopia system … such as cost codes, options, house types, the lot matrix, and subcontractor records. State-of-the-art migration tools allow you to transfer your existing data easily. 2. Design and Collaboration: View and comment on CAD drawings using instant online messaging. Collaborate with the architect or engineer in real-time. Use the final designs and specifications to solicit subcontractor and vendor bids — all online. 3. Bidding and Purchasing: Prepare information for vendors and subcontractors to bid on a project, distribute plans and specifications through an electronic RFP, and answer questions using online messaging. Your standardized response form will prompt rapid replies and allow you to compare the bids quickly. Then, generate the contract … all on your computer. 4. Project Management: Monitor the production schedule throughout construction, post changes to vendors and subcontractors, discuss changes online in real-time, approve purchase and work orders, and track information such as building permit data. Your staff

can update the schedule in the field using a wireless device. Subcontractors and vendors can use this module to view house type, options, and other unit-specific information. 5. Sales: The Sales Director can input and maintain all retail pricing information for the project, including base prices and options. Prospects can be pre-qualified, and the contract purchase price and option pricing can be determined … all on the Internet. You have the ability to view and update information on prospects and outside brokers. The module also maintains a historical change record so you can have document revisions. Custom options and change orders can be effected online. 6. Homebuyer Homepage: Manage all communications with the purchaser and keep your information record here. Information the homebuyer needs to supply will be automatically listed on their page. Customize a master checklist to reflect options, customizations, contract particulars, and the schedule for that project. Coordinate presettlement walkthroughs with customers, as well as settlements between lenders and title companies. Give homebuyers their own password-protected URL so they can view their contract information together with any change orders, the production schedule and projected completion date, a list of information they need to provide, and digital photos of their home at various stages of construction. This section provides an efficient way for you and the buyer to communicate about any issue. 7. Customer Service: Allows your staff and the homebuyer to collaborate on administration of the warranty service. Customers can read warranty information, log requests, and view the status of their order — eliminating frustration and repeated phone calls. An online calendar coordinates the subcontractor/vendor and purchaser’s schedules. 8. Custom Report Writer: All the data within BuildTopia can be configured into a custom management report. The CRW will allow you to produce sales reports, settlement updates, scheduling and delivery composites, options and NSO preference reports, prospect demographics, work order/purchase order statements, job costing and just about any other report you can imagine. If the data is there, you can organize and report on it at any time. 9. LinkTopia: BuildTopia's latest version offers LinkTopia. LinkTopia will allow a homebuilder to interface with their back end accounting system. Depending on your existing system, LinkTopia will import data from BuildTopia into files formatted for your specific accounting package, enabling you to incorporate BuildTopia data in your Job Cost and AP. 4.

Introduction to Prolog Manager Ver. 6.0

You will start learning Prolog Manager Ver. 6.0 starting with Lesson 4. Prolog Manager 6 Online Manual.pdf is attached to this lesson in pdf Acrobat format. This manual is 802 pages long. I suggest that you view it online and not print it. The manual serves as a back-up and support to the instructions given in the lessons. I also suggest that as you begin lesson 4 that you take about 30 minutes to just become familiar with the overall look and feel of the general Prolog screen and menus.. Look at each pull down menu, icon and switchboard button to become familiar with them. It will begin to become intuitive as to which buttons and menus to look at to perform which functions.

Prolog 6 is currently only available in the computer lab in SNLB 219. If you are interested in purchasing a student version (full scale version that times out in 6 months with another 6 month renewal) contact the instructor. The cost has typically been about $35.00. To access Prolog 6 you must be in the CM 415 course and obtain a password from the instructor.

Self-Check Questions Lesson 12: 1. New web based applications are significantly improving project team communication and collaboration. a. true b. False 2. a. b. c. d.

HWA/Gensler used Buzzsaw to successfully manage: North Avenue Collection, Las Vegas, NV Largest hotel and casino in the world Venetian, Chicago, IL None of the above

a. b. c. d.

Project organizational charts help to: Open communication lines Know how to get paid Define contractual responsibilities a and c

a. b. c. d. e. f.

Document and contract control software should be: flexible able to integrate and be compatible with other software programs able to access and retrieve documents and reports quickly have security and networking/sharing capabilities all the above c and d only

3.

4.

5. a. b. c. d.

One of the first things that you should do in learning Prolog is to: read the Prolog Manager 6 Online Manual dive right in to the first Prolog assignment spend about 30 minutes becoming familiar with pull down menus, icons, and switchboard buttons all the above

(answers: 1-a, 2-d, 3-d, 4-e, 5-c)

Lesson 12 Quiz: See Blackboard, Assignments, Quizzes.

Lesson 13: Partnering, Meetings, Negotiating and Arbitration Introduction: Meeting others expectations can often be very difficult. We may have a mental model as to how we are going to perform our work. Once the work is done, what we have completed may be different from what the customer expected. To solve these problems we have meetings, negotiate with one another and even look to solve the problem through the courts. Partnering, better communication and meetings, better negotiating skills and arbitration are all practices that have proven to be a benefit to the natural conflict that arises from construction contracting. This lesson will provide you with new knowledge about how to use these practices in the industry.

Lesson Objectives: At the end of this lesson you should: 1. Be able to define partnering and how it can be used to better the construction of a project. 2. Be able to describe the basic components of any negotiation, and its stages and tactics. 3. Understand four basic personality types and how they interact with each other. You should also be able to understand personality types when negotiating. 4. Have a general knowledge of the different type of meetings that are held at the jobsite. 5. Understand how arbitration is used in construction contract management.

How to Proceed: (12)Read and review the discussion materials. (2) Read and review Construction Jobsite Management, Chapter 6, pg. 149-168 and Chapter 10 pg. 261-262. (25)Answer the self-check questions to evaluate your readiness to take quiz 13. (26)When you feel that you are ready, Take quiz 13.

Discussion Materials: Concept 1: An example of Partnering Read the following case study about the effects of partnering.

Case Study: Associated General Contractors 1997 Build America Awards: Cole Overland Interchange By the early 1990s, Boise Idaho’s Cole Overland Interchange had become the busiest interchange in the State of Idaho. To further complicate the situation, the interchange crossed busy I-84, which caused a dangerous congestion problem. Over 99,000 vehicles zigzagged through this maze that links this rapidly growing neighborhood and business center with downtown Boise and I-84. In June of 1994, Nelson/McAlvain Construction J.V. was awarded the single largest contract ever let by the Idaho Transportation Department (ITD). The $30.3 million dollar contract included the reconstruction and realignment of I-84 and the Cole and Overland interchange. To correct the problem, I-84 was dropped 24 ft. below the existing grade and widened from 4 to 6 lanes. A 92,000 SF bridge deck was constructed above the live interstate to carry 6 lanes of traffic in each direction. This was accomplished with no traffic closures. Innovative precast temporary bridges were used as a rotary overpass system that allowed work to continue without closing Cole/Overland or I-84. Two-way traffic was maintained on Cole and Overland and four lanes were kept open on I-84 throughout construction. An ingenious conveyer system also helped move more than 1 million cubic yards of excavated earth over live traffic to avoid dangerous interface between freeway traffic and construction vehicles. This complex project was completed 22 days ahead of schedule on a 795-day contract. This two-year project was completed within budget with no claims filed. Through a unique partnering agreement, 117 public information meetings were held. These weekly meetings included the principle contractors, sub contractors, engineers, ITD, Federal Highway Administration (FHWA), local residents and businesses. Over 100 businesses were able to remain open during construction including a major shopping center and a large truck stop. Safety was a major concern because of the large amount of active traffic. 26,100 LF of concrete guardrail and 6,294 LF of concrete median barriers were used. Careful management resulted in no lost days due to injuries or accidents.

Approximately 110,000 cubic yards of concrete were used in the construction of the bridge, pavement and sound wall. 47,000 tons of asphalt, 1.578 million pounds of metal reinforcement was also used. Expert management, team cooperation and the spirit of partnering lead to the completion of the single largest and most complex highway construction project ever undertaken in the State of Idaho. The project was completed ahead of schedule, within budget and with minimal disruption to the local community and motoring public. Nelson/McAlvain Construction J.V. proudly submits this project for the 1997 Build America Awards. MEETING THE CHALLENGE OF A DIFFICULT JOB Nelson/McAlvain Construction J.V. realized before the bid process the importance of assembling a team that could meet the demands of such a difficult and fast track job. A master schedule was developed that maximized work efficiency while minimizing effect to the motoring public, local residents and business owners. The schedule itself included 780 activities covering 795 days which when printed was 43 LF long. The greatest challenge came in the mammoth coordination of the schedule. Two-way traffic was always open on Cole/Overland and four lanes were always open on I-84 while maintaining safe and productive working conditions at different locations on the project. Scheduling was further complicated by two winters, severe temperature drops which only allowed short windows of time for paving and a major utility relocation that was outside the scope and control of both the owner and the contractor. The project called for the complete reconstruction of the busiest intersection in the State of Idaho. This 8800 LF section of highway included I-84, the main freeway in southern and western Idaho that is intersected by Cole and Overland interchange. Cole and Overland were straightened at right angles and the interchange was lowered to ground level. I-84 was reconstructed and widened from 4 to 6 lanes and lowered 24 feet while a new 6 lane, 92,000 SF Cole/Overland intersection bridge deck was constructed overhead. The J.V. met the challenge by expert scheduling, working double shifts and off hours to ensure that every milestone was met in this long and complicated project. EXCELLENCE IN PROJECT MANAGEMENT Through a partnering agreement, the major stakeholders in the project held team-building sessions and developed a mission statement, team goals and an issue resolution system. This up front work paid off. Through this unique agreement, 117 public information meetings were held including the principle contractors, sub contractors, engineers, ITD, FHWA, local residents and business owners. Problems were solved quickly and efficiently resulting in satisfied stakeholders with no claims filed. During a particular period there was a sever drop in the temperature during a critical paving phase. The partnering relationship allowed for the stakeholders to come together and brainstorm for possible solutions. A solution was identified and ITD allowed for the paving to proceed without affecting the schedule. There were 8 major (and 4 minor) phases to the project that required rerouting and the resignalization of traffic patterns 22 different times. This coordinated schedule was nothing less than extraordinary considering the 99,000 vehicles that travel the interchange every day. Safety was a major concern because of the large amount of active traffic. Weekly safety meetings were held for all prime and sub contractors. There was an average of 80 workers per day on the project and up to 300 during peak periods. 26,100 LF of concrete guardrail and 6,294 LF of concrete median barriers were used. This thoughtful and careful management resulted in no lost time due to injuries or accidents.

The project was designed to avoid elevated structures thus diminishing visual and noise problems. The J.V. took extra precaution for dust abatement and were prepared to use erosion control blankets as needed. The project included a 4500 LF sound wall that was constructed early to block noise and dust from local businesses and residences. 117 public information meetings were held to solve any concerns with local businesses and residents. Secondary water for residences that come through irrigation ditches is very important for watering yards and gardens. Special precaution was taken to ensure that residences had their irrigation. On several occasions a water truck was sent to water a local residents flowerbed. Also, at the contractor’s expense, some structures were provided to accommodate the local natural habitat. Adjacent to the interchange had been an unsightly 7-acre gravel pit. Using spoils from the excavation to lower I-84, the pit could be reclaimed and brought back to its natural level. Other spoils were recycled for future use by the ITD. Some adjoining property owners volunteered to seed and landscape their property that has created a very attractive and pleasing area to travel through. EXCELLENCE IN CLIENT SERVICE Nelson/McAlvain Construction J.V. delivered the project 22 days ahead of schedule on this long and difficult project. The commitment was met to keep all roads open and operating. The project was within the budget with no claims filed. Through the innovative precast temporary bridges that were used as a rotary overpass the J.V. was able to save the client over $250,000. Even though the actual contract was with the ITD the indirect customers such as the business owners, commuters and local residents were able to carry on their daily business with little interruption. The J.V., even though not required to do so by contract, worked double shifts and many off hours to lessen the impact of work on the daily traffic flow and yet stay with the aggressive schedule. CONTRACTORS CONTRIBUTION TO THE COMMUNITY The ability to maintain the delicate balance of keeping the project on schedule and yet keeping traffic lanes and local businesses open was a major contribution to the community. Never before in the history of ITD has a contractor held so many weekly meetings to effectively communicate with local businesses and residents. This expanded partnering with the community took a possible explosive situation and turned it into a win-win situation for every one. Now that the project is completed it is an attractive and functioning interchange that features one less traffic signal that allows traffic to flow more smoothly in all directions. It also is a monument of cooperation and goodwill showing what government, industry, business and local citizens can do when they work together. Concept 2: Basic Concepts About Negotiating 1. 2.

Never assume that money is the bottom line. Never narrow negotiations down to one issue. If you do there is only a winner and a loser. Always keep at least 4 or 5 items on the table so that there can be a win-win resolution.

3. 4.

5.

Never assume you know what the other party wants. Get to know the person along with the prospective deal. You can never have enough information about the negotiation. Do your homework. Power is the single most important element in negotiating. In any negotiation, one person is in control and one is being controlled. Power comes from titles, ability to reward/punish, values, and strength of personality (charismatic), expertise or information strength. Time is always critical in negotiations. The person under the most time pressure usually does worse in any negotiation. 80% of the concessions come in the last 20% of the time available to negotiate.

Concept 3: Three Stages of Negotiating 1. 2.

Establish criteria - both yours and theirs. Get information about the other side. Ask open-ended questions - who, what, where, and why. Look for motives, hot buttons and hidden agendas. Reach for a compromise; try to meet on some common ground for a win-win outcome.

3.

Concept 4: Tactics and Counter-tactics of Negotiating 1. 2. 3.

Nibbling - Since after the initial agreement the opposition is most vulnerable, some things are more easily achieved later in a negotiation; introducing a demand early may mean it will be bargained out or traded off. Hot Potato - Someone wants to pass his or her problem to you. Higher Authority - Always have an unidentified entity behind you that has the authority to make a decision.

4.

Set-Aside - Put an issue on hold, find agreement on little issues to create momentum, and then return to any major impasse issues.

5.

Mediator - Bring in a third party to mediate, someone who must be perceived as neutral.

6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17.

18. 19. 20.

Good Guy/Bad Guy - "If it were my decision..but my boss" Never Take the First Offer - Always go through the process, make the other side feel they've won something; you won't feel satisfied if you don't try for a better deal. Feel, Felt, Found - "I understand how you feel, others have felt the same way, however we have always found.." Smart/Dumb - Dumb is smart. Play dumb and don't give yourself away; the other side will be kept off guard and will try to help you. Trade-Off Principle - The value of services always diminishes rapidly after the services have been performed; anytime you make a concession, ask for a trade-off immediately. Walk away - Communicate your willingness to walk-away, when you pass the point of walking, you have lost the negotiation. Flinching - Visibly react any time a proposal is made to you. Vise Technique - Squeeze people into concessions, "You'll have to do better than that". Power of the Printed Word - People believe what they see in writing. Withdraw Offer Principle - Withdraw an offer you've already made by retreating to an earlier position. Several reason can be given; higher authority, mistake, so much time conditions have changed, trade-off. Easy Acceptance - Put other side in position where they don't feel bad about giving in to you. Funny Money - Unusual way of breaking down price i.e., dollars per day, cents per mile etc.

Decoy - Take attention away from real issue. Red Herring - Create issue that will later be used to trade off for a real issue. Puppy Dog Close - Buyer use, feel, get emotionally involved with product.

21. 22. 23.

Reluctant Buyer - Show disinterest no matter how high your enthusiasm. Want-It-All - Always ask for more than you expect to get. Splitting the Difference - Encourage the other person to split between what you want and what they are willing to give. 24. Shut-Up - When you make an offer do not say another word until the other party has responded. You can talk yourself out of a deal. 25. Negotiation Location - Where, when and how you meet is extremely important. Work these to your power advantage.

Concept 5: Understanding Personality Types Analytical - Hooked on data and detail. Wants the facts before trying to solve the problem. Analytical gets along least well with extroverts, whom they find shallow and unconcerned with the facts. In dealing with them, give analytical the facts they crave. Help them see that they have to deal with people, not just principles, facts, or the system. The analytical is, by nature, an executive. He or she is very rigid in approaching a negotiation. Analyticals are reluctant to be flexible. While extroverts are loose on detail, analyticals are precise. They are concerned with the principle underlying any issue. Their fault is inflexibility. Pragmatic - Bottom-line, time-management type, doer. High pressure. May not take personal feelings into account. The pragmatic gets along least well with the amiable, whom the pragmatic thinks is too emotional and slow in making decisions. The pragmatic is turned off by too much enthusiasm, thinking it is phony. To get along with the pragmatic, demonstrate a concern for practical issues, time and the bottom line. Change the pragmatics fixed position through logic. In negotiations, pragmatics become street fighters. They are in the negotiations to get what they want. They are sure there must be winners and losers, and they want to be winners. They fight hard and see little justification for concessions. Their main fault in negotiations is the tendency to stubbornly hold a fixed position. Amiable - Interested in the feelings of other people. Don't like high pressure. Wants everyone to get along. Amiables are suspicious of the hard sell, and get along least with pragmatics, whom they think are unfeeling. Since amiables most want agreement, show them that much progress has been made and encourage them to promote their original good ideas. Don't pressure them. Let them see you have concern for the interests of the people involved in the situation. The amiable is the opposite of the pragmatic in negotiations - amiables become pacifiers. Their goal is not to win the negotiation, but to keep everyone happy. They dread high pressure encounters and long for a solution, even one that does not meet their requirements. The amiable is too easily swayed. Extrovert - Very emotional and easily inspired, seeking a good time. Excitement may take precedence over careful thought. Extroverts have the most problems with analyticals - they believe analyticals are too mired in detail, unemotional, and very slow to act. Take time with the extrovert to talk about his or her family or other interests. Persuade the extrovert to tone down the motivational rhetoric so the other parties can reach their own conclusions. The extrovert becomes a den mother in a negotiation. Den mothers are so enthusiastic about their project they lose sight of the fact that others are not as enthusiastic. The extrovert's fault is a tendency to ignore the feelings of the others in the negotiation.

Consider the following matrix about personality types: Analytical - OWL Pragmatic - BULL LOW-ASSERTIVE HIGH-ASSERTIVE LOW-EMOTION LOW-EMOTION Likes detail and full presentation from A to Z Takes time to decide and slow paced Very time conscious and early for Appointments

Likes the Bottom Line - "Get to the point" Z (not A through Z, just Z) Fast to decide Fast pace and is a "Neat type of messy"

No Mistakes (yours or theirs) Doesn't like over excitement/emotionalism Security more important than prestige and status

Results oriented Needs to control a situation Prestige & status more important than security

Like order and is very "neat/neat” Likes being alone, solitude Business first, then social

Likes challenges Like freedom from control Business first, then social

Amiable - LAMB LOW-ASSERTIVE HIGH-EMOTION

Extrovert - TIGER HIGH-ASSERTIVE HIGH-EMOTION

Be their friend, give direction, show Not into detail - prefers others to do support detail Slow to decide and often change their mind Fast to decide and is a Slow, slow pace and is "a messy type of "messy/messy" neat" Fast pace and often late for Understands your mistakes - feels badly about their mistakes appointments Very emotional Security more important than prestige and status Avoids conflict Wants protection and peace Social first, then business

Loves recognition Emotional likes to get excited Prestige and status more important than security Likes a challenge Social relationships important Social first, then business

Highly

Highly

Emotional

Assertive

Self-Check Questions Lesson 13: 1. a. b. c. d.

The reading describers how many different types of jobsite related meetings? 5 8 12 15

a. b. c. d.

Some of the great values of a partnering workshop is: the participants draw battle lines how problems can be solved set goals to maintain cooperative relationships b and c

a. b. c. d.

If you are using an AIA contract, the arbitration process can be found: At the American Arbitration Society (AAS) In the A201, section 4.5 There is no arbitration language in AIA documents In the A101, section 6.6

a. b. c. d.

Pragmatic personality types: like being alone wants everyone to get along needs to control a situation wants social first, then business

2.

3.

4.

5. If a sub contractor came to you with a list of problems that they are having as to why they can’t perform, what negotiating tactic are they using on you? a. splitting the difference b. good guy, bad guy c. hot potato d. flinching Answers: 1-c, 2-d, 3-b, 4-c, 5-c

Lesson 13 Quiz: See Blackboard, Assignments, Quizzes.

Lesson 14: Labor Relations and Productivity Introduction: Labor is the most important production player in the construction of any project because they run the equipment and put materials into place on a project. Labor expectations and agreements must be understood and managed carefully. Unlike a chapter on human resources this lesson focuses on understanding labor unions, labor agreements and labor productivity.

Lesson Objectives: At the end of this lesson you should: 1. Understand the historical background of labor unions and their current formation. 2. Understand labor agreements. 3. Understand how the Davis-Bacon Act affects construction labor costs. 4. Be able to describe the basic fundamentals of labor productivity. 5. Understand the value of labor records. 6. Understand what affects labor productivity. 7. Understand how repetition can enhance productivity.

How to Proceed: (13)Read and review the discussion materials. (2) Read and review Construction Jobsite Management, Chapter 7, pg. 169-189. (27)Answer the self-check questions to evaluate your readiness to take quiz 14. (28)When you feel that you are ready, Take quiz 14.

Discussion Materials: Concept 1: History of Labor Organizations in the United States The history of labor organizations begins in the early nineteenth century, and their growth parallels the increasing industrialization of modern society. Initially tradesmen possessing some skill or craft began organizing into groups variously called guilds, brotherhoods, or mechanics societies. Their objectives were to provide members, widows, and children with sickness and death benefits. In addition, these organizations were interested in the development of trade proficiency standards and the definition of skill levels such as apprentice and journeyman. They were often "secret" brotherhoods since such organizations were considered unlawful and illegal conspiracies posing a danger to the society. From the 1840s until the era of the New Deal in the 1930s, the history of labor organizations is the saga of confrontation between management and workers, with the pendulum of power on the management side. With the coming of the New Deal and the need to rejuvenate the economy during the Depression, labor organizations won striking gains that virtually reversed the power relationship between managers and workers. The American Federation of Labor (AFL) was organized by Samuel Gompers in 1886. This was the first successful effort to organize skilled and craft workers such as cabinetmakers, leather tanners, and blacksmiths. Since its inception, the AFL has been identified with skilled craft workers as opposed to industrial "assembly line" type of workers. The Building and Construction Trades Department of the AFL, which is the umbrella organization representing all construction craft unions, was organized in 1908. The semiskilled and unskilled factory workers in "sweat box" plants and mills were largely unorganized at the time Gompers started the AFL. Many organizations were founded and

ultimately failed in an attempt to organize the industrial worker. These organizations, with euphonious sounding names such as Industrial Workers of the World and the Knights of Labor, had strong political overtones and sought sweeping social reforms for all workers. This was particularly attractive to immigrant workers arriving from the socially repressive and politically stagnant atmosphere in Europe. Such organizations attracted political firebrands and anarchists preaching social change and upheaval at any cost. Confrontation with the police was common and violent riots often led to maiming and killing. The most famous such riot occurred in the Haymarket in Chicago in 1886. Gompers was seriously interested in protecting the rights of skilled workers and had little interest in the political and social oratory of the unskilled labor organizations. Therefore, separate labor movements representing skilled craft and semiskilled factory workers developed and did not combine until the 1930s. This led to different national and local organizational structures and bargaining procedures that are still utilized and strongly influence the labor picture even today. In the 1930s, industrial (i.e., factory semiskilled) workers began to organize effectively with the support of legislation evolving during the post-Depression period. The AFL, realizing such organizations might threaten its own dominance, recognized these organizations by bringing them into the AFL camp with the special designation of Federal Locals. Although nominally members, the industrial workers were generally treated as second-class citizens by the older and more established craft unions. This led to friction and rivalry that culminated in the formation of the committee for Industrial Organizations (CIO). This committee was established in 1935 unilaterally by the industrial locals without permission from the governing body of the AFL. The act was labeled treasonous and the AFL board ordered the Committee to disband or be expelled. The AFL suspended the industrial unions in 1936. In response, these unions organized as the Congress of Industrial Organizations (CIO), with John L. Lewis of the United Mine Workers as the first CIO president. Following this rift between the industrial and craft union movements, the need to cooperate and work together was apparent. However, philosophical and personal differences prevented this until 1955, at which time the two organizations combined to form the AFL-CIO. This organization remains the major labor entity in the United States today. Associated General Contractors (AGC) is made up of primarily pro-labor type companies. Associated Builders and Contractors (ABC) is just the opposite. ABC is what is called merit shop of non-union companies. These two organizations often conflict. Concept 2: Davis-Bacon Act In 1931, a very far-reaching piece of legislation was passed that even today has a significant impact on the cost of federally funded projects throughout the United States. The Davis-Bacon act provides that wages and fringe benefits on all federal and federally funded projects shall be paid at the "prevailing" rate in the area. The level of prevailing rates is established by the secretary of labor, and a listing of these rates is published with the contract documents so that all contractors will be aware of the standards. To ensure that these rates are paid, the government requires submittal by all contractors of a certified payroll each month to the federal agency providing the funding. These rates are reviewed to determine whether any violations of the Davis-Bacon pay scale have occurred. This act is so far-reaching in its effect because much of public construction at the state and local level may be funded in part by federal grants. A large municipal mass-transit system or wastewater treatment plant, for instance, may be funded in part by a federal agency. In such cases, the prevailing rates must be paid. Since the Department of

Labor generally accepts the most recently negotiated union contract rates as the prevailing ones, this allows union contractors to bid without fear of being underbid by nonunion contractors paying lower wage rates. Concept 3: Understanding Labor Productivity The following graph shows typical labor productivity by our of the day.

Typical Daily Production Labor Curves For Industrial Workers Involved in Heavy Work

100%

50%

8

9

10

11

12

Morning

1

2

3

4

Afternoon

Lunch

The next graph shows typical productivity by day of the week.

Production Curves By Day of Week For Industrial Workers Involved in Heavy Work

100% 80

X X

X

X X

X

60 40

Mon.

Tues.

Wed.

Thurs. Fri.

Sat.

5

Construction labor is divided into three categories. The first category called “Effective” is the percentage of time that workers spend at the workface actually putting materials into place or other-wise performing their work. The second category “Contributory”, are workers traveling for materials or tools and equipment. The third category “Not Useful”, found that workers were not doing any activity that specifically was involved in putting work in–place. Labor Productivity Ratings by Trade Trade or Craft Bricklayer Carpenter Cement finisher Electrician Instrument Installer Insulator Ironworker Laborer Millwright Equipment operator Painter Rigger Sheetmetal Pipefitter Teamster Average

Effective Contributory Not Useful 42 33 25 29 38 33 37 41 22 28 35 37 30 30 40 45 28 27 31 36 33 44 26 30 34 36 30 38 22 40 46 26 28 27 57 16 38 33 29 27 36 37 45 16 39 36 33 31

This next graph demonstrates the effect of overtime on productivity. The graph shows that if you worked labor at 60 hours that their productivity begins to drop dramatically over the coming weeks. In the 9th week you may be working labor 60 hours but only getting 40 hours worth of productivity. What can we learn from this? Use overtime sparing, and for short lengths of time. Overtime:Weekly Productivity Return Based on 40-Hour Week Hours Per week

60 56 52 48 44 40

36

0

2

4 6 8 10 12 Weeks of Continuous Operation

14

A few other factors that dramatically effect productivity are weather and height. The five factors of weather that affect labor are temperature, relative humidity, direct sunlight and glare, wind and wind chill factor, and moisture. Typically, productivity drops below 70% when the following conditions are present: > 95 degrees F. > 90 percent relative humidity < 32 degrees F. Four considerations to improve productivity when dealing with weather are: • • • •

Keep temperature between 50 and 70 degree F. Keep area dry Keep area free of wind Keep labor out of direct sunlight

A typical rule of thumb is that productivity drops 50% as soon as labor gets 5 feet off the ground. Every thing slows down when labor is working off ladders and scaffolding. Materials are slowing getting to the work face and the travel of labor is slower. Equipment is also slower getting into place and using. The safety requirements for fall protection does not necessarily slow down production. In many cases it actually enhances productivity. A few approaches that may help working at heights are: • • •

Prefabricate units and lift into place Pre-assemble units and lift into place Modularize as much as possible

Use the M-T-M approach. Methods-Time-Measure. Methods determination must precede time determination. Determining the best method to install something should be calculated before you can calculate how long it will take to put materials in place. After you have determined a method then try it and measure the results. You may try several methods before settling in on one method that proves to be the quickest. Concept 4: Repetition, Key to Productivity Successful project mangers will look for opportunities of repetitive work because they know that they can increase productivity. Consider a study of framing homes.

Improved Productivity Through Repetition Framing Crew for Single Family Homes

Number of Man-hours

Break Between Framing houses #29 and 30

180 160 120 80 40 0

4

8 12 16 20

24

29

30

34

38

42

Number of Houses Framed

In this study, the framing crew cut their man-hours in half after the first 8 houses. Even after a break it only took them 4 houses get back to their previous production number.

Self-Check Questions Lesson 14: 1. a. b. c. d.

Which construction association favors the AFL-CIO? ABC AGC NAHB NBC

a. b. c. d.

The reading identifies ____ of the most common factors that can affect labor productivity. 4 8 15 22

a. b. c. d.

High labor turnover is an indication of: poor weather materials problems and late deliveries general unrest and lack of leadership impact of changes

2.

3.

4. a. b. c. d.

According to studies, which day is the most productive day of the week? Monday Tuesday Wednesday Thursday

a. b. c. d.

M-T-M suggests that: time goals proceed pre-determined methods methods must precede time determination measures must precede methods none of the above

5.

answers: 1-b, 2-d, 3-c, 4-b, 5-b

Lesson 14 Quiz: See Blackboard, Assignments, Quizzes.

Lesson 15: Subcontracting and Purchasing Introduction: Most projects rely from 75% to 100% of a project to be completed by contracted subs and suppliers. Thus, general contractors (GC’s) are no better than their sub contractors and suppliers. There are three important elements that must be considered when trying to manage a project through sub contractors and suppliers: (1) carefully pre-qualify all sub/suppliers, (2) clearly define the scope of work and ensure that there is complete understanding between the GC and the sub/supplier as found in the 15 point agreement, (3) seek to establish long term relationships that will be mutually beneficial to the GC and the sub/supplier.

Lesson Objectives: At the end of this lesson you should: 1. Know how to pre-qualify sub contractors and suppliers 2. Understand how sub contractors help to manage risk on a project 3. Understand what requirements a sub contractor must complete before they begin work 4. Know the key components of any sub contract 5. Know the 10 step process for purchasing materials, supplies and equipment 6. Know the difference between charge-backs and withholding payments to subs 7. Understand to approve/disapprove of sub contractors work

How to Proceed: (14)Read and review the discussion materials. (2) Read and review Construction Jobsite Management, Chapter 9, pg. 225-252. (Supplemental reading: Basic Construction Management, Construction Team Building and Trade Contractor Management, Chapter 6, pg. 87-104.) (29)Answer the self-check questions to evaluate your readiness to take quiz 15. (30)When you feel that you are ready, Take quiz 15.

Discussion Materials: Concept 1: Pre-qualifying Subcontractors and Suppliers There are four basic considerations when pre-qualifying subcontractors and suppliers that you must take into consideration. 1.

Does the sub contactor have the background and experience to perform the work that you need them to perform? This is where you want to check the sub out, ask for references, go and look at their work and even visit a current work site of theirs to see how they conduct their work. Many, many problems could have been prevented if general contractors would have performed better background checks on their sub contractors and suppliers.

2.

How financially stable is the sub contractor or supplier? Ask for a D&B report. Dunn and Bradstreet (D&B) is a business reporting agency that gives a credit score about the financial stability of companies. If a sub contractor is heavily in debt or is facings a major lawsuit you would want to know about it before you contract with

them. It is always a good practice to get a list of their major suppliers and determine whether or not they are current with their accounts payable. 3.

What is the capacity of the company? What is the organization like and how many journeymen and apprentice workers do they have? What current work have they already sub contracted for? What kind of equipment do they own and lease? Are they union or non-union? All of these questions will help you determine whether or not the sub contractor has the capacity (manpower and equipment) to meet the demands of your project. A large sub contractor may have many employees but they may already be committed to another project.

4.

Can you work with this sub contractor or supplier? There may be personality clashes or work habits that you know will just cause problems down the road. If you have a potential conflict or you are concerned about something it is best to deal with it now, because it will always raise its ugly head later in the project.

Concept 2: Before a Sub Contractor Can Start Work Before a sub contactor starts on a project there is a checklist of items that must be reviewed and made sure that all of the paper work is complete and turned into the main office. Here is an example: XYZ Drywall was the low bidder for the Tracy Toyota Dealership that your company is the general contactor on. The AIA A401 Agreement Between Contractor and Subcontractor has been reviewed and signed by both parties. Is the sub contractor ready to start? No! There are conditions of the sub contract that generally must be fulfilled before they start. Here is a list of common conditions:  Evidence of a signed and approved contract  Evidence of proper insurance and liability coverage ($1 to 2 million at  Evidence of state Workmans Comp coverage  Evidence of proper local or state sub contractor licenses  Evidence of proper bonding requirements if required  Evidence of proper business licenses

minimum)

Others may include:  Evidence of proper safety training  Evidence of specific requirements of the general contract that may include Davis-Bacon age rates, percentage of minority laborers etc. Typically a contract administrator will make sure that all required documents are in a file or “on record” before a sub contractor is cleared to begin work. A similar checklist may be true for approved vendors who supply certain materials and products through the purchase order system of the company. Concept 3: Key Components of a Sub Contract Agreement Page 234 of the text lists 15 key components that should be found in every sub contract agreement. These 15 items, articles or areas not only outline the basic provisions of a contract

such as scope of work, price and payment but also identify the “what if” something happens during the course of the contract. These 15 articles are rooted in tried and tested contract law that is found in the AIA A 201 General Conditions of the Contract in the Appendix of your text. There are many different sub contract agreements that are used in the industry. Just make sure that as you review sub contractors that these 15 articles are clearly addressed. Concept 4: Expediting Purchase Orders Larger companies will have purchasing departments that will expedite the ordering and delivery of supplies, materials and equipment. (Equipment generally means rented or leased equipment.) There must be a close coordination and working relationship with purchasing. For smaller companies, the project manager or even the superintendent may be required to purchase and track materials and equipment. We have already discussed tracking purchase orders in previous lessons. Remember that any purchasing order system must have the following elements: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Identify correct items (material/supplies/equipment) and quantity to be ordered. Verify items with field personnel. Clearly identify quote price with vendor and all shipping and delivery costs. (FOB) freight-on-board means that who ever receives the shipment must pay at time of delivery. Order the material/supplies/equipment using a standardized form that leaves a paper trail. Code the PO to tie to the correct job and budget SOV code. Log order into a PO logging/tracking system. Clearly identify the cost at the time of ordering. Do not wait for month end invoicing. (People forget quotes and promises.) Negotiate when the material/supplies/equipment will be delivered. Negotiate how the material/supplies/equipment will be delivered and unloaded and where. (Jobsite layout) Coordinate delivery and unloading and placement with field personnel. Verify delivery item count with purchase order. Clearly identify who received the order and when. Notify purchasing of any irregularities when comparing PO to actual delivery. Approve PO and delivery ticket to be paid during regular billing cycle.

Concept 5: Seeking Long-term Relationships Successful contactors seem to work with successful sub contactors and suppliers. By developing long term relationships with subs/suppliers, contractors get along better, are able to solve problems easier, know how one another does business, thus makes it easier for one another. In a hard bid situation it is not always possible to pick your subs/suppliers. There are many residential contactors who do not try to hard bid every job but will negotiate with a sub/supplier and say: ”Hey!, if you will provide all of the plumbing for me, at a certain price (usually a unit price), be on the job when I ask you, be customer oriented and take care of any problems immediately including warranty work, I will: use you as my exclusive plumber for the next year, and pay you every two weeks.” Does this sound like a win-win agreement? Absolutely! Many residential contractors will seek such annual agreements because it makes their life so much easier.

Self-Check Questions Lesson 15: 1. a. b. c. d.

Evaluating the capacity of a sub contractor means: their financial stability their resources available to perform for your project their experience in performing that type of work whether or not you can work with them

a. b. c. d.

The difference between sub contracts and purchase orders is: the amount of money spent warranties labor time of delivery

a. b.

A back-charge and a withheld payment is the same thing. true false

2.

3.

4.

Indemnification clauses in subcontract agreements: identify the principle owners of the sub contracting firm hold the GC and owner harmless from lawsuits connected with the subs workforce or work on the project c. ensure that the sub meets all quality standards d. ensure that all submittals are presented on time a. b.

5. When creating a PO it is not necessary to get the exact price until the end of the monthly billing period. a. true b. false answers: 1-b, 2-c, 3-b, 4-b, 5-b

Lesson 15 Quiz: See Blackboard, Assignments, Quizzes.

Lesson 16: Residential Quality Control, Inspections and Checklists Introduction: A city council had a difficult decision to make in their fair town. It seems that a problem had developed. The problem was that above the city was a beautiful vista that overlooked the city and the surrounding area. People from around the region came to view the beautiful sight. The problem was that it was very steep and people got too close to the edge and began to fall over the ledge. The decision on the minds of the city council was whether or not they should put an ambulance in the valley or a fence at the top of the vista. This fable tells a great story of quality management. Unfortunately most of us are accustomed to the idea of “putting an ambulance in the valley” or what we call inspection. The line of thinking says that we should do our work and when we think it is done have someone inspect it to see if it is correct. This type of thinking (inspection mentality) has shown that today’s businesses spend up to 40% of total production in inspection and re-work. Studies have shown that if businesses can focus on prevention, and putting a fence at the top of the vista, it may cost 10% more in production than their current costs but they are now doing things right the first time. If current costs of production are 40% for re-work, and the cost to do it right the first time is 10%, then there is a potential savings of 30% in how we currently do work. This 30% savings represents a significant opportunity in business production, operations and profits.

Lesson Objectives: At the end of this lesson you should: 1. Understand the difference between inspection and prevention 2. Learn the 8 step process for implementing a TQM process in construction project management 3. Learn how to recognize elements of a poor quality system 4. Learn Demings 14 points of a TQM system 5. Understand how to use quality control checklists 6. Be able to identify key research facts from the National Association of Home Builders concerning quality performance statistics 7. Understand how to measure quality perfromance

How to Proceed: (15)Read and review the discussion materials. (2) Read and review, Basic Construction Management, Chapter 3, pg. 45-59, become familiar with the Appendix. pg. 149-194. (3) Answer the self-check questions to evaluate your readiness to take quiz 16. (5) When you feel that you are ready, Take quiz 16.

Discussion Materials: Concept 1: A Practical Approach to Total Quality Management (TQM) in Construction Project Management We want to re-think how we do business and change our focus from inspection to prevention. We do this by establishing requirements before we ever start a work process. This is what a quality control checklist is, a list of preventive requirements.

Total Quality Management can help solve problems or help define a new way of performing a work process. Consider the following case study and the eight steps as this residential construction company looks at the cost of not having houses ready to pass 4-way inspection (framing, electrical, plumbing, heating) each month. Step 1:

Define the problem to be solved or the starting point of a new process. State the requirements of what you want to have happen.

Example:

We seem to be having too many 4-way re-inspections for our new homes. Requirements: 100% of our 4-way inspections pass the first time. This is called Zero defects.

Step 2:

Gather data on just how severe the problem is

Example:

A review of the 6 four-way inspections that we had last month showed that 5 had to have re-inspections.

Step 3:

Calculate the price of non-conformance (PONC). This is the cost to do it over and re-work.

Example:

Average days lost for re-inspection: 5 days Finance costs: $36 per day x 5 = $180 Other scheduling problems = $100 Owners dissatisfaction = $100 Increased PM time:5 hours x $50 = $250 Cost of materials and labor to fix = $100 Total PONC = $730 (cost last month 5 x $730=$3,650 - if continues for one year at this rate could be $43,800)

Step 4:

Review current work process flow.

Example:

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

Step 5:

have general plans and specs reviewed and bid by sub GC and sub agree on price GC calls sub to perform work sub starts work sub finishes stage of work and says it is ready for inspection GC calls city for inspection Inspector comes passes or fails if fails - GC calls sub sub returns to fix problem GC visits to look at fix GC calls city to re-inspect city comes and re-inspect inspector passes or fails if fails repeat steps 9 - 14 Brainstorm ways to prevent mistakes in the future

Example: (see changes in bold) 1. Insure that general plans and specs include critical points of inspection 2. at plan review, review with city/inspector critical points that they look for in the inspection, include changes in plan. 3. Create quality checklist for 4-way inspection 4. Plans reviewed and bid by sub 5. GC and sub agree on price, sign contract with quality checklist and schedule 6. GC calls sub to perform work 7. sub starts work 8. sub finishes stage of work and says it is ready for inspection, reviews and checks quality checklist 9. GC reviews quality checklist with sub 10. GC calls city for inspection 11. Inspector comes passes or fails, meets with GC and sub, makes any correction on the spot 12. if fails - GC calls sub 13. sub returns to fix problem 14. GC visits to look at fix 15. GC calls city to re-inspect 16. city comes and re-inspect 17. inspector passes or fails 18. if fails repeat steps 9 - 18 Step 6: Calculate the Price of Conformance (POC) to implement new changes. This is the cost to do it right the first time. Example:

Closer plan review for critical points: 1 hour x $50 = $50 Quality control checklist: 1 hour x $50 = $50 Review quality control checklist with sub before inspection: 1 hour x $50 = $50 Meet with inspector: 1 hour x $50 = $50 Total POC = $200

Step 7:

Implement Changes

Example:

Implement the changes described in step 5. Involve members of the team that are players in the process.

Step 8:

Measure and Track Your Results on a Monthly Basis

Example:

Track and measure your results on a chart that every one can see. Show the progress and the saving to the company. Give credit to those members of the team who are making a difference in the process such as your sub contractor, contractor administrator and the home designer and specifier.

Four-Way Inspections Defects 6

Month J

PONC Total PONC $730 $4,380

5 5 4 4 3 3 2 1 0 0 0

F M A M J J A S O N D

$730 $730 $730 $730 $730 $730 $730 $730 $730 $730 $730

$3,650 $3,650 $2,920 $2,920 $2,190 $2,190 $1,460 $730 $0 $0 $0

By September the company has reached its goal of zero defects.

Self-Check Questions Lesson 16: 1. a. b. c. d.

TQM is based on the principle of: inspection prevention quality checklists re-work

2. The national statistic according to NAHB for the number of callbacks to do re-work on completed homes in the U.S. has risen: a. 5% b. 10% c. 25% d. 50% 3. The superintendent that does not know how to recognize high quality in plumbing, electrical, heating and air conditioning, concrete or finish carpentry is really not qualified. a. true b. false 4. a. b. c. d. e.

One company implemented a PRIDE program that: lets employees know how important they are controls employee pride and self interest helps employees take personal responsibility all the above a and c

a. b.

It is better to rely on public inspectors than on in-house formal quality control systems. true false

5.

answers: 1-b, 2-c, 3-a, 4-e, 5-b

Lesson 16 Quiz: See Blackboard, Assignments, Quizzes.

Lesson 17: Commercial Quality Control and Testing Introduction: Quality control (QC) includes ensuring that the quality requirements in the documents are met. This may be performed by the contractor, the owner or representative or by an outside testing agency. Quality is also measured another way; the building inspection department. Building inspectors are looking to determine if the project meets code requirements and the approved set of drawings and specifications.

Lesson Objectives: At the end of this lesson you should: 1. Understand the difference between QC and TQM 2. Learn how to better manage building inspectors 3. Understand the role of outside testing agencies 4. Understand what building inspectors responsibility really is 5. Know where to find quality requirements in the project manual 6. Learn the primary building code agencies in the United States

How to Proceed: (16)Read and review the discussion materials. (2) Read and review, Construction Jobsite Management, Chapter 10, pg. 253-260, 262-275. (3) Answer the self-check questions to evaluate your readiness to take quiz 17. (6) When you feel that you are ready, Take quiz 17.

Discussion Materials: Concept 1: Dealing with Inspectors Now that you know something about negotiating skills and understanding personality types, you are better prepared to work with permitting municipalities and building inspectors. You should get to know the basic attitude and culture of the permit agency that you are working in. Some are very helpful and considerate and others are just the opposite. There are contractors who will add money to their estimate if they are going to do work in certain municipalities just because they are slow and difficult to deal with. Once you know their culture, talk to other contractors about the inspectors that inspectors seem to be better to work with than others. Sometimes you can request a certain inspector. Be prepared by knowing what certain inspectors are like to work with and what it is that they usually look for. It is generally not favorable to have an inspector do an inspection without a representative of the contractor to accompany them. The contractor wants to build a relationship every time that an inspector comes on the site. Before you ever call for an inspection you should have your own inspection. There are two focuses that you should have. The first is a quality control checklist. Second, is to review the conformance of the approved set of drawings and specifications from the municipality. The inspector is not there to direct your work. They will come to determine if this phase of the project meets the governing code and complies with certain requests and markings on the approved drawings. You should always arrive at the site before the inspector and be prepared! It may also be helpful to have workers standing by just in case the inspector is

not going to pass some certain detail. The workers can immediately correct the problem and before the inspector leaves they may approve the correction. Inspectors see a lot of projects every day. If the contractor does quality work and gains a reputation for quality, inspectors may not always look at every detail because they know your company and the quality of work that you do. Concept 2: Understanding Testing Agencies How does an owner or their representative (architect) know if all of the quality requirements that are in the project manual are what is called in the industry “built to spec”. This is where quality control (QC) comes in. Unlike some aspects of residential construction, meeting quality control standards is taken very seriously in commercial and industrial construction and compliance is carefully measured. In fact, many projects require that independent testing agencies be on site to watch and approve certain segments of the work before the contractor can proceed. The owner should pay these testing agencies. There have been some circumstances where the contractor controlled the testing. This is like the fox watching the hen house. An example of this was the Denver airport. Because of the fast track nature of the airport, the contractor conducted some testing and problems were later discovered. Large, very expensive sections of a runway had to be demolished and replaced. On large projects it is very common to have many different testing agencies at the jobsite. On smaller projects the contractor may be required to show proof of evidence that QC requirements were met. When a project manager is preparing to start a new project, they also must begin to clearly identify and track the quality requirements that are found in the project manual.

Self-Check Questions Lesson 17: 1. Philip Crosby, author of Quality is free promotes that quality is something that is measurable in term of costs. a. true b. false 2. a. b. c. d. e.

The primary objective of QC is to: avoid duplication of effort assure that every quality aspect is covered provide documentation of materials, installations and test all the above a and c only

a. b. c. d. e. f. g.

A building inspector can issue a contractor which of the following documents: building permit jobsite inspection card correction notice stop work notice certificate of occupancy all the above a and b only

3.

4. It is not wise to always have a representative from the contractor to accompany the inspectors but to let them inspect on their own.

a. b.

true false

5. According to the reading, a list of standards and abbreviations for manufacturers, associations, institutions and standards are found in which division and section of the project manual? a. Div 1, 00800 b. Div 1, 01700 c. Div 8, 01600 d. none of the above answers: 1-a, 2-d, 3-f, 4-b, 5-a

Lesson 17 Quiz: See Blackboard, Assignments, Quizzes.

Lesson 18: Contract Changes and Claims Introduction: There is no question that things never quite turn out the way that you anticipate in any construction project. When the 1976 Summer Olympics were awarded to Montreal, Canada, plans were already moving ahead for the Olympic venues and especially the main stadium pictured below.

If something could go wrong it did. The original budget for all of the venues was about $240 million. The design and specifications were late in getting out to bid. Because they were so late many contractors would only work on at time plus material basis. The design was new and included materials and techniques that had not been done before. This caused a major productivity problem. There was a labor strike. There was already a shortage of labor and skilled trades in the region. The drawings were all in metric and many of the sub contractors came from the United States and could not read the drawings. The drawings had to be redone in feet and inches. It was cold and bitter the winter just before the Olympics. The temporary tenting and heating costs per day during that winter exceeded $40,000 per day. Because of the late start, contractors were working on top of one another. At one point there were 80 tower cranes in operation on the stadium at one time. Montreal was not going to be embarrassed in front of the world. They finished the venues on time and the games went forward. Unfortunately the final price tag was a staggering $1.3 billion dollars! There differently were some changes and claims on this project.

Lesson Objectives: At the end of this lesson you should: 1. Understand how change order markups are calculated and distributed 2. Learn the activities that may cause change orders 3. Learn what change orders can effect 4. Learn basic terminology used in changes and claims 5. Learn the change order process

6.

Review basic contract law as found in the AIA A201, General Conditions of the Contract

How to Proceed: (17)Read and review the discussion materials. (2) Read and review, Construction Jobsite Management, Chapter 13, pg. 325-345. (3) Answer the self-check questions to evaluate your readiness to take quiz 18. (7) When you feel that you are ready, Take quiz 18.

Discussion Materials: Concept 1:

Change Order Markups

There are a few things that should be considered about change orders. First, change orders are usually addressed in the bid documents. The bid documents will identify exactly how much a contractor or sub contractor can charge for a change order. This is always well understood well before the project is bid. For example: in the bidding instruction section of the project manual it will state that in the case of the change order the contractor will be allowed a 15% markup. This is generally understood as a markup and not a profit margin. It may further say that if the general contractor (GC) uses their own forces then all 15% will then go to the GC. If the GC is using a sub contractor then the total markup profit is 15% with 10% going to the sub contractor and 5% going to the GC. If there was a $35,000 base amount approved change order and there was a sub contractor involved then: $35,000 base amount x 1.15= $40,250, thus the 15% markup is $5,250 ($40,250-$35,000) If 10% goes to the sub and 5% to the GC then: the sub would get $3,500 and the CG would get $1,750. (Performed by dividing by thirds: $5,250/3=$1,750) Don’t forget that change orders can also be a negative number. If portions of the work are taken away a negative change order can be written.

Self-Check Questions Lesson 18: 1. a. b.

There is no such thing as a negative change order: true false

a. b. c. d.

A claim is: a signed change order a PCO an unresolved change request means and methods

a. b. c. d.

The discovery of asbestos would: be an example of code revisions stop that phase of the work until the contractor takes care of it be an example of vendor coordination stop that phase of the work until the owner takes care of it

2.

3.

4.

A change order is an adjustment to the contract amount only. a. true b. false

5. A change order will have no impact on liquidated damages that may be assessed to the contractor. a. true b. false answers: 1-b, 2-c, 3-d, 4-b, 5-b

Lesson 18 Quiz: See Blackboard, Assignments, Quizzes.

Lesson 19: Contract Progress Payments Introduction: It has been said that construction is the only business where you have to ‘work harder than any other profession and then beg to get paid’. I don’t know if that is entirely true but there is indeed a grueling process that we often go through to get paid. In this lesson you will learn about the established traditions of requesting and receiving progress payments.

Lesson Objectives: At the end of this lesson you should: 1. Know how to calculate and complete a payment application 2. Learn what retention is for and how it is calculated 3. Learn how a sample payment application calendar works

How to Proceed: (18)Read and review the discussion materials. (2) Read and review, Construction Jobsite Management, Chapter 14, pg. 347-349, 368-378. (3) Answer the self-check questions to evaluate your readiness to take quiz 19. (8) When you feel that you are ready, Take quiz 19.

Discussion Materials: Concept 1: Payment Applications Calculations The pay application process that is generally practiced in commercial construction is an excellent way to track exactly where the project is at any given time. This method takes in to account approved change orders, retainage and past payments made. Briefly review the AIA documents G702 and G703 as they are found in the reading. Let’s walk through the calculations for a payment application. Carefully review the sample Pay Application found on page 373 of the reading. Notice the nine line items that need to be completed and the instructions for calculating some of the line items. Also that at the bottom there is a change order summary. Consider the following example: Contract amount $1,000,000, retainage is 5% total. Payment #1.

20% completed, #1 change order (CO) approved for $5,000

Payment #2.

36% completed, CO #2 for $7,500, CO #3 for 3,600

Payment #3. 52% completed, CO #4,5,6 totaling $34,600 Given this information you can now calculate all nine line items found in the sample on page 373. You need four items to calculate a monthly pay application. (1) original contact amount, (2) project-to-date approved change orders, (3) project-to-date percentage of completion, (4) and the amount of required retainage.

Application for Payment #1 #2 20% 36%

Step Activity Total Completed

#3 52%

1.

Contract Sum

$1,000,000

$1,000,000

$1,000,000

2.

Change Order

$5,000

$16,100

$50,700

3.

Contract sum to date (1+2)

$1,005,000

$1,016,100

$1,050,700

4.

Total completed

$201,000

$365,796

$546,364

5.

Retainage (5% total)

$10,050

$18,289

$27,318

6.

Total earned less retainage (4 less 5) $190,950

$347,506

$519,045

7.

Less previous certificate

$0

$190,950

$347,506

8.

Current payment

$190,950

$156,556

$171,539

9.

Balance to finish (3 less 6)

$814,050

$668,593

$531,654

Take a few minutes and do the math to make sure that you understand how each number was calculated. Most construction documents allow for material that is delivered to the jobsite and stored properly or stored in an off-site, insured and bonded warehouse may be submitted as part of a payment application. Sometimes there is a different retention for materials than work performed (see note on G702, number 5 retainage.) Also notice that the G703 is a roll-up sheet that has the details of each SOV budget line item. Luckily you will be happy to know that Prolog does an excellent job in preparing these exact forms. You will be given similar information and asked to calculate three pay applications for both quizzes. Concept 2: A Sample Pay Application Calendar On larger projects the pay application calendar can be a little confusing. Let’s suppose that a project start on the 18th day of a certain month. The pay calendar process would look like this: Date of Month Day 18

(month 1) started project

Day 1

(month 2) no applications were filed because it was out side the payment cycle

Day 15

pay application #1 on AIA G702-3 is due from sub contractors/suppliers to the GC for review and approval

Day 20

pay application #1 on AIA G702-3 is due from the GC to the architect for review and approval

Day 25

pay application #1 is approved and given to the owner for payment processing and check preparation

Day 1

(month 3) Owner makes payment # 1 to the GC

Day 1-5

GC makes payment #1 to the sub contractors/suppliers

Process begins again… Day 15

pay application # 2 on AIA G702-3 is due from sub contractors/suppliers to the GC for review and approval

What happens when a sub contractor forgets to turn their application for payment in on time? They must wait until next month! They will only forget once!

Self-Check Questions Lesson 19: The following case study will be used for both quizzes. You are given a new project that started on the 19th day of the month. The contract amount is $500,000. The retention amount is 5% total, month 1, $7,000 in change orders are approved, month 2, $4,000 in change orders are approved, in month 3, $8,000 in change orders are approved. The first pay application projectto-date percentage of completion is 25%, application #2, 40%, and application #3 is 75%. Complete the blanks to help answer some of the questions. This same case study will be used for the quiz. Step Activity Total Completed

#1 25%

#2 40%

#3 75%

1. Contract Sum

$500,000

$500,000

$500,000

2. Change Order

$

$

$

3. Contract sum to date (1+2)

$

$

$

4. Total completed

$

$

$

5. Retainage (5% total)

$

$

$

6. Total earned less retainage (4 less 5) $

$

$

7. Less previous certificate

$

$

$

8. Current payment

$

$

$

9. Balance to finish (3 less 6)

$

$

$

1. a. b. c. d.

The retention amount for pay application #1 is: $5 $5,000 $2,500 $6,337

a. b. c. d.

The balance not paid on the project after pay application #2 is $500,000 $386,587 $316,820 $149,212

a. b. c. d.

The total of change orders project-to-date after payment #2 is: $7,000 $11,000 $19,000 $25,000

2.

3.

4. Assuming that there is 30 days per calendar month, from the first day of the project until the GC gets their first paycheck will be how many days? a. 15 days b. 30 days c. 42 days d. can not be determined 5. When a payment for a project is not made until the project is turned over to the owner, this is called: a. retainage b. turnkey c. AIA G702 d. A good deal Answers: 1-d, 2-c, 3-b, 4-c, 5-b

Lesson 20: Project Closeout Introduction: It is very important to determine what the construction documents require for project closeout. Begin the closeout of the project the day that you start the project! Usually section 1700 of Division 1 will identify those requirements. I once sat on $500,000 of a general contractor for three months because the GC could not get their closeout documents in so that I could release their retention amount. Their profit amount was less than $200,000. It was unbelievable! A very good practice is to tie closeout documents to the monthly payment application process. A good example is that if the closeout documents require as-built or record drawings then as the GC, require updated as-built drawings for each payment application. If the documents require warranty and guarantee information on equipment and building systems there is no reason why you have to wait until the end of the project to collect those items from sub contractors. A good TQM approach would be to require those items with the payment application process. In this lesson there is also a discussion about risk management and construction problem solving. This should serve as help in identifying and avoiding problems so that the closeout process becomes a smooth transition and not a 24-7 nightmare.

Lesson Objectives: At the end of this lesson you should: 1. Understand the two primary areas of risk management in project construction management 2. Be able to identify common project problems and 6 steps to solve them 3. Understand the general requirements for commercial project closeout 4. Understand the closeout process 5. Understand terminology related to project closeout 6. Be able to conduct a financial resolution of a project 7.

How to Proceed: (19)Read and review the discussion materials. (2) Read and review, Construction Jobsite Management, Chapter 15, pg. 379-399. (3) Answer the self-check questions to evaluate your readiness to take quiz 20. (9) When you feel that you are ready, Take quiz 20.

Discussion Materials: Concept 1: Risk Management Project management is mostly about managing risk and solving problems. There are two primary risk areas in construction. They are contractual agreements and financial challenges (16 in all). Contractual Agreements include meeting requirements of contract documents (drawings and specifications). They also include the following: 1. Owner/Contractor risk balance 2. Time and scheduling 3. Cost and budget

4. Quality 5. Overall Client Expectations 6. Safety The second area is financial. This includes completing work to ensure profitability for the company and subcontract administration. This also includes the followings: 1. Material purchases 2. Equipment purchase and rental 3. Labor relations and productivity 4. General requirements 5. Change orders/Potential change orders 6. Miscalculations of estimated costs 7. Unknown conditions not included in estimate 8. Payment applications and retention 9. Project closeout 10. Insurance Managing risk on any project should include the regular review of these items and an assessment of the project. Concept 2: Project Problems and Solving Them The following are 22 of the more common reasons why projects have problems. 1. Poor communication and misunderstandings 2. Verbal (undocumented) contracts and agreements 3. Unclear or misunderstood contracts or other expectations 4. Personality types and poor negotiating 5. Labor Pool (tight or unskilled) 6. Sub contract completion (capacity, commitment, too busy, skill, knowledge, attitude) 7. Material availability 8. Equipment availability 9. Economics and changing market costs (supply and demand) 10. Poor accounting/management system that does not capture true job cost accounting 11. Poor management (lack of attention, commitment, knowledge, skill, attitude) 12. Project managers pushed beyond their span of control (too many jobs, not enough time) 13. Weather 14. Contractors trying to make up money lost on past projects 15. Litigation of other projects 16. Past unresolved sub contractors and clients causing problems on current projects 17. Property neighbors 18. Building permits, zoning, inspections, inspectors, code interpretations 19. Labor unions, labor agreements 20. Vandalism and arson 21. Miscalculations of estimated costs 22. Conditions not included in estimate If problems can be identified early they can be more easily solved. The following expands on Lesson 17 about practicing Total Quality Management to solve problems. Here is a simple yet

powerful suggestion for solving problems on a construction project. Consider the following six steps: 1.

Define the situation, divide it in to easy to understand parts a. clearly describe the problem b. Focus on data, not cause c. Specify nonconformance, not blame d. determine size in numbers or PONC (price of nonconformance), not in vague terms

2.

Plan the Solution a. Who needs to be involved? b. What measurement will show us that corrective action has been effective?

3.

Fix a. b. c.

Temporary step to keep going and to patch the process Try to spend as little as possible until you know the root cause This is not a permanent solution

4.

Identify the Root Causes a. Review requirements b. Look for threads of similarity, when, where, what equipment, facilities, personnel involved c. Look for opportunities for error, duplication, non-standardized procedures, chance for oversight or mistake, unclear requirements d. Use Cause and Effect Diagram or Pareto analysis

5.

Take Corrective Action (put prevention in place) a. Generate possible corrective actions, one or more causes, many possible actions for each b. Select the corrective action, cost, complexity, time, mistake proofing c. Plan and communicate the corrective action, customers, suppliers, budget, schedule, training, measurement, documentation, timing (Gantt and Pert charts) d. Implement the corrective action, verify actions that have been taken place, document and measure performance

6.

Evaluate and Follow-up a. Evaluate, according to the measure of completion b. Follow-up, audits, surveys, informal reviews c. Preventing problems, work with customers and suppliers, gain process knowledge, proof processes, operate and manage with zero defects performance standard

Self-Check Questions Lesson 20: 1. Substantial completion is a. when the building is completely finished b. when the building is almost finished except for minor items so that the owner can occupy the building c. when the punch list ends and the warranty period begins

d. b and c 2. Project close-out documents does not include: a. spare parts and extra materials b. warranties and guarantees c. permanent cylinders and re-keying d. issuing close-out change orders 3. The two top problems faced in project management are: a. Poor communication and misunderstandings, Verbal (undocumented) contracts and agreements b. Unclear or misunderstood contracts or other expectations, Personality types and poor negotiating c. Labor Pool (tight or unskilled), Sub contract completion (capacity, commitment, too busy, skill, knowledge, attitude) d. None of the above 4. A listing of close-out documents and other requirements are found in: a. AIA A201 General Conditions of the Contract b. Division 1, 1700 c. AIA A101, the Agreement d. Supplementary Conditions 5.

Spare parts and extra materials belong to the: a. contractor b. sub contractor c. owner d. architect e. a and b only

Answers: 1-d, 2-d, 3-a, 4-b, 5-c

Lesson 20 Quiz: See Blackboard, Assignments, Quizzes.

CM 415 Assignment #2

The Super Bridge Analysis Carefully view the video of the Clark Bridge constructed in Alton, Illinois. Take careful notes. (1) Write a minimum of 5 pages (double-spaced) detailing your observations of the following items: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17.

time and schedule cost control quality and inspections risk management relationship with stakeholders safety customer satisfaction problem solving jobsite layout and control productivity total quality management project team communications and relations computerized project management project planning and meetings negotiations labor relations changes and claims

(2) Complete a Project Risk Assessment (SWOT) of the project at the beginning. Then describe the actual outcomes of the project as compared to the plan. Briefly describe what you learned from the experience. Grading: 12 points for describing the 17 viewpoints of the project. 5 points for the Project Risk Analysis and outcomes. 2 points for describing what you learned. 1 point for style, presentation and grammar.

CM 415 Assignment 3

Carlisle, PA Construction Project Budget and Job Cost Model Grading: 7 Points for Part 1, 12 Points for Part 2, 1 Point for overall presentation = 20 points Flying J, Inc. is a $3.5 billion retail fuel distributor. To find out more about the company go to www.flyingj.com. In this first part you are the construction owner representative for a Flying J. This new facility is going to sit on 15 acres in Carlisle, Pennsylvania. The facility is a 19,000 SF, single level, wood frame, and brick veneer structure. There are five bidders on this project. Open the file called Carlise.xls to review the bid breakdown. All bidders were required to submit their bids showing how their numbers were distributed throughout the CSI codes. Part 1: SOV Evaluation

Answer the following 7 questions. 1.

Who is the apparent lowest bidder? (Note Cumberland’s actual bid)

2.

What is their bid price?

Questions 3-7 apply to only the apparent low bidder. 3.

Prepare an excel spreadsheet showing (1) the budgeted dollars for each division, (2) showing the division percentage as compared to the total bid price. (Example: If division 16, electrical, was $50,000 and the total bid price for all divisions was $2.5 million then division 16 would be 2.00% of the total.)

4.

Which divisions have over 10% of the total bid price? (These are higher risk areas.) Are there any divisions or line items that look suspicious?

5.

Which divisions have between 5 to 10% of the total bid price? (These are smaller risk areas but still need to be monitored.)

6.

What is the projected percentage of profit? 7. If you combine the projected percentage of profit and the percentage of general requirements, what is the total percentage of the two? What is the percentage if you deduct allowances?

Part 2: Job Cost Model In this second part you are assuming the role of project manager for the apparent low bidder (general contractor). One of the first things that you do is to “buy out” the project. That means that you review all of the bids and begin to write contracts, issue PO’s, and labor tickets. The following is a list of your general job cost ledger of your activities for the first 30 days. The notice to proceed is dated June 1, 2XXX. The AIA A101 is signed on that date. Your activity begins on that date. The prime contract (PC) is the same amount as the low bidder price. This is job 16 for year 2XXX. So do you remember our coding method? Let’s add a few more pieces. First the coding can be divided into Income and OutGo. A.

There are three Income codes:

PC – Prime Contract, Between the owner and the general contractor CO – Change Order, change between owner and general contractor OI – Other Income, other income that can come from a variety or sources that do not fit into PC or CO. B.

There are four OutGO codes:

SC - Sub Contract, You can write a sub contract. PO - Purchase Order, You can write a purchase order for generally materials or purchasing or renting equipment. L - Labor, You can hire your own employees or temporary help to perform labor on the project. O - Other, is for other unforeseen financial purchases or commitments that don’t come through the above three methods. This is really a catch-all for mistakes made in the sub contracting and purchasing system. The only addition is to add a log number so that it is easy to track. For example, instead of just putting SC we would put SC1, meaning subcontract log number 1. You could then go to that log and look at number 1 to see any details. If you need to review some of the previous lessons go ahead and do so. C.

There are two Management codes:

PCO - Potential Change Order ETF - Estimate to Finish (These are used as a management tools to better estimate actual committed costs.) To better help you understand the general ledger we have divided them it into general ledger sub logs. The sub logs look like this: D.

There are three INCOME LOGS:

PC – Prime Contract LOG CO – Change Order LOG OI – Other Income LOG E.

There are four OUTGO LOGS:

SC - Sub Contract LOG PO - Purchase Order LOG L – Labor LOG O – Other Expense LOG F.

There are two Management LOGS:

PCO - Potential Change Order ETF - Estimate to Finish Using what you learned in past lessons, place the log information into the job cost model and calculate the totals using an excel spreadsheet. Project Logs for Carlisle, PA June, 1 2XXX – July 1, 2XXX

INCOME LOGS: PC – Prime Contract LOG Job # date 016 6/1

Year Code No. 2XXX PC 1

CSI no code

$ amount Name (enter amount) Flying J

CSI 2110

$ amount $8,500

Name Flying J

CSI

$ amount

Name

CO – Change Order LOG Job # date 016 6/25

Year Code No. 2XXX CO 1

OI – Other Income LOG Job # date none

Year

Code No.

OUTGO LOGS: SC - Sub Contract LOG Job # date 016 6/2

Year Code No. 2XXX SC 1

CSI $ amount 2110 $81,000

Name Standard Excavation

016 016 016 016 016 016 016 016 016 016 016

6/2 6/3 6/3 6/5 6/5 6/8 6/10 6/2 6/15 6/16 6/18

2XXX SC 2XXX SC 2XXX SC 2XXX SC 2XXX SC 2XXX SC 2XXX SC 2XXX SC 2XXX SC 2XXX SC 2XXX SC

2 3 4 5 6 7 8 9 10 11 12

2210 2281 2513 2711 2721 3303 4200 5120 6100 8410 7200

$174,500 $3,000 $1,100,000 $40,387 $520,000 $363,399 $38,750 $26,000 $224,000 $23,500 $21,800

Standard Excavation Termiters Hill Asphalt Cumberland Gas Standard Excavation Granite Concrete Ben’s Masonry Steel Replicators The Carpentry Shop Valley Glass Dilbert’s Roofing

No. 1 2 3 4 5 6

CSI 1001 1002 1500 1510 5500 8100

$ amount $42,000 $14,000 $1,200 $800 $9,700 $10,500

Name Liberty Bonding Cumberland County Temp Shed Ma Bell Steel Fab Steel Fab

No. 1 2 3

CSI 1050 1510 1020

$ amount $680 $230 $278

Name field layout job trailer work misc.

CSI

$ amount

Name

PO - Purchase Order LOG Job # 016 016 016 016 016 016

date 6/01 6/02 6/02 6/02 6/04 6/15

Year Code 2XXX PO 2XXX PO 2XXX PO 2XXX PO 2XXX PO 2XXX PO

L – Labor LOG Job # 016 016 016

date 6/10 6/11 6/12

Year Code 2XXX L 2XXX L 2XXX L

OE – Other Expense LOG Job # date none

Year

Code No.

PCO – Potential Change Order LOG Job # date 016 6/15

Year Code No. 2XXX PCO 1

CSI 2110

$ amount Description 10,000 discovered underground concrete

ETF – Estimate to Finish LOG Job # date

none

Year

Code No.

CSI

$ amount

Name

CM 415 Assignment #4, Prolog: Setting Up A Project Assignments 4, 5, 6 will all be done in Prolog and will be based on the BYU Health Center Project. The scope of the project, the budget and the subs have been reduced to help simplify the learning process. You can check out a specification book for this project from SNLB 230, secretary’s office. The book must stay in the building. Prolog 6 is currently only available in the computer lab in SNLB 219. If you are interested in purchasing a student version (full scale version that times out in 6 months with another 6 month renewal) contact the instructor. The cost has typically been about $35.00. To access Prolog 6 you must be in the CM 415 course and obtain a password from the instructor.

Objectives: Task 1: Setting up a new project Task 2: Setting up companies in the database Task 3: Setting up the SOV for the project Task 4: Create a transmittal cover sheet for your assignment Task #1: Setting up a new project Use Prolog to setup a new project called: YourName.pmd (this mean your personal name) *You do not need to print a report for this first task, however, without following these steps to complete this task, the rest of your reports will be incomplete when they come out! The Company address and information are: 230 SNLB Provo, UT 84602 Phone: 801-378-8758 Fax: 801-378-7519 Email: Your email address. Project Manager: Brigham Young Superintendent: You (type in your name) Job Starting Date: 1/23/02 Job Finish Date: 1/23/03 Instruction for this task: 1. Go to Start, CAEDM Programs, Sot Programs, Prolog Manager 6. 2. Click on File, Open Database. 3. Select the appropriate Server under the Connection Name (The professor or the TA should have signed you your server number). Then click on the “ ” refresh button to get all the user name into the pull down list on the left, then use the pull down menu to find your name under User Name, then type in your Pass Word (it is the last 4 digits of your social security number), then hit OK. 4. When a Project List Window comes up, click on the “Create Project” button, and this will take you to a Portfolio Manager window, click OK to use the default project

template, then the Portfolio Manager window will be active for you to create a new project. 5. Click on General tab on the top, type in “W.O.#R-####” (the “####” should be the last 4 digits of your SSN) as the Project Number, the Project Name should be “YourName.pmd” (for example, my name is Tom Swift, so I would type in “TomSwift.pmd” as the project name, there should be NO space between the last name and the first name, type first name first.) 6. Then use the information provided above to fill in the Job Telephone #, Job Fax #, Start Date, Finish Date, Project Address (remember to hit “Enter” key to separate street address and city, state, zip. It’s just like how you would write on an envelope). Choose “Construction” as Project Status, the Approximate Contract Value is $1,936,735 (when type in this amount, do not type in a dollar sign or the thousand separation coma), for Description, type in “This is the project for the new BYU Health Center”. 7. Click on Miscellaneous tab on top, Choose Lump Sum as the Type of Contract, Steel and Concrete Frame as Type of Construction, Medical as Type of Building, then fill in the Province/State, Territory, Region, Country, using Provo, UT as the location reference. (you should always use the pull down menu for each item to see if there is something that you can use already, if not, then create your own). 8. For Company ID, type in the initial of your first name, then your last name (for example, my name is Tom Swift, so I would type in “TSWIFT”. Remember there is NO space between). It should automatically pull up your Company Name that has been already set up in the database (The TA should have created you as a general contracting company in Company Setup). Then type in the name of Project Manager, Superintendent using the information given above. 9. Click on Project Details tab on top, under Company Name column, type in BYU as the Owner, your name as the Contractor, VCBOA as the Architect shown on the cover sheet of the specification book for BYU Health Center Project. Contract Date is 1/20/02. 10. Click on Contacts tab on top, click on Add Link… button to add a link. A Contact Pick List window should pop up. Pick your company, M.C. Green & Sons, RK Concrete, Max Masonry, Doors to Go, Captain Cabinet from the list, then click OK. (You have just been linked as the GC and five subs to your project. Usually, you have to go into the project to set up your subs under Company Setup first before you can do this, and then come back to finish up the Project Profile under Create Project. But this time, I have done this for you.) 11. Now you have finished the basic information for setting up a new project, click on Save at the bottom of the window to exit out of there. (This may take awhile)

Task #2: Setting up companies in the data base Go into the project you just set up, to set up company.

1. Click on File, Open File, (if you have logged off after Task #1, then log in again as what you have done for task#1). Now you should be in your project and ready to go. You will notice that there is a vertical navigation bar on the left hand side of the screen. Take a look at it so that when you read the instruction, you will find the right bar/button easily. 2. On the Navigation Bar, Click on Admin, Company Setup, the Company Setup window should be opened up by now. Click on the “ ” Look Up button at the bottom of this window; it will take you to another window where you can select the company to edit. Do not edit any company information other than your own! Notice when you click on any of the column heading once, the computer will sort your company information according to that column heading you just clicked on in a ascending order, if you click on the same column heading again, then it will sort in a descending order. Knowing this now, let’s click on Company ID once to sort it; this will make it so much easier to find your name in an alphabetical order. Find your Company ID (I have created a general contracting company for every student which is named from your first name’s initial plus your last name. For example, my name is Tom Swift, so my Company ID will be “TSWIFT”). Highlight your company’s row and click on Edit button at the top of this window to return to the main Company Setup window. 3. Now you are ready to edit your company’s profile. As you can see, I have filled in the top of the window for you, such as your Company Code, Name, Short Name, and Type of Company (for subcontractor’s company, select Subcontractor as the Company Type, and that is how you can set up a sub). Now it is your responsibility to follow through the rest of the steps and fill out all the other information that’s missing for your company. 4. Under General tab, type in Main Office as the Current Main Location, select General from the pull down menu for your company’s Main Construction Division, type in General Contracting for your company’s Trade. You may leave Specification Section blank considering you are a general contracting company. However, if you are setting up this for a subcontractor, then you do have to type in the sub’s 5 digit CSI code in there. Type in Your Name as the one who supplied this information, your title is Superintendent, and type in today’s date (the short cut for this is CTRL+D). 5. Then click on Address tab; Follow along the Main Office row, under Display Address column, type in the project address that has been given at the beginning of this assignment. Make sure the way you input the address is how you would like to display on a mailing envelope. Then under Address 1, type in the street address only, then Apartment#/Suite#/PO.Box# for Address 2 and Address 3 (if there are any, if not, just leave them blank). Fill in City, State, Zip, Country, Tel#, Fax#, E-mail (use the same information as Task#1). Choose General from the pull down menu for the Address Type (General means that it is the address for all purposes, such as mailing, billing, contacting). Make sure the Main box is checked (it means that this address serves as the main address for your company if you have more than one address set up in there. The computer should automatically check one of the address locations as the main address). 6. Click on Contacts tab, fill in your name as the Emergency Contact, and type in 801555-5555 as the Telephone# on the right of your name. Then Add Row to start setting up you as a contact for your company. Under Contact ID, I have already typed it in for you for class purpose. Notice that I have used your first name’s initial plus your last

name as the Contact ID. (For example, my name is Tom Swift, then I would type in “TSWIFT” as my Contact ID) The key is to develop a standardized input system that everyone in your company will follow. It will make your life ten times easier as you go along with other tasks in Prolog. For our class, this is the standardized system I have set up for everyone to use: your first name’s initial plus your last name as the Contact ID. 7. Now you need to finish filling out the rest of your information as a Contact person for your company: Initials, Prefix (use pull down menu), First Name, Middle Name, Last Name, Title (superintendent), Location (use pull down menu to select Main Office), Tel#, Fax#, E-mail, check the Notify box. Click on the little button under Linked Column to take you to a Select Project window. Click on the project you have created, then click on the right arrow button to move the project to the right side of the window, then click OK to return to the main window. Make sure the Main box and the Active box are both checked. 8. Now click on the General tab again, notice that the company’s tel# and fax# have been automatically fill out already. This is because at the beginning, you have typed in Main Office as your Current Location, then after you have filled out all the information for that location under Address tab, the computer just took the information you filled in there to fill in the tel# and fax# on this page. Click Save and say Yes to commit changes and save the changes you have made. Do not close it yet! 9. While this company profile is still open, click on the “ ” quick print button at the top of the Prolog window, the Report Manager should pop up and the default Companies and Contacts’ report format should already been highlighted. It is called “Company Contact List [Detailed, Listing of Company Contacts Grouped by Company]”. Leave it there and click Run to see a print preview of the report. When everything looks good and all the necessary information are all on the report, click on the little “ ” button at the top of the preview window to print this report out. To exit out of the print preview window, click on the red “X” symbol on the top left corner of this preview window, then click Close to get out of the Report Manager window. Now you can go ahead and close out of the Company Setup window. Task #3: Setting up the SOV for the project In this task you will set up 32 Account codes with the SOV’s (Schedule of Values) into the budget. Use the information below: # CSI Division CSI Section Budget Amount $ 1 1 01010 80000 2 2 02200 240000 3 2 02510 65000 4 2 02666 85000 5 2 02668 115000 6 2 02720 54689 7 3 03310 187965 8 4 04200 56900 9 5 05120 126400

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

6 7 7 7 7 8 8 8 8 8 9 9 9 9 9 10 11 12 13 14 14 15 16

06100 07122 07210 07251 07410 08110 08410 08700 08710 08800 09255 09310 09510 09650 09900 10000 11132 12300 13000 14100 14240 15100 16001

56455 23144 25000 16000 18900 34000 56000 13000 12566 34000 80000 87500 15600 4500 24566 35600 23500 56350 0 10500 15000 126800 156800

(Remember, even if the amount is zero, such as item #28, you still need to set it up as a budget account for zero dollar amount budget. This way, others will know that you have taken this account into consideration). 1. Go to Cost Control bar, Budget to open up Budget window. Opening up your specification book to the Index portion, follow the description for each CSI specification to enter the budget Description in Prolog. (for example, for section 01010, you would type in “Summary of Work” as the Description.) 2. Under General tab, use pull down menu to fill out Phase of the Project (choose Construction), Division (depends on the account’s CSI division from the Table above), CSI Code (depends on the CSI Section from the SOV Table above), Scope (choose Original Scope), Extension (type in 00), Category (choose Sub Contract). Then enter the Original Amount according to the Table above. Make sure you don’t put in “$” sign or separation coma. Notice when you hit enter there, the same amount will be filled in as Uncommitted Cost. The computer automatically assumes that you have not subbed out or allocated any of the money yet until you sign value to your subcontracts when you do that later on into the assignments. 3. Take a look at what is under the rest of the tabs but leave them as they are. Then click “Save”. Do the same for all 32 accounts. So at the end, when you click on the “ ” button, there should be 32 budget codes under the list for budget. *When you make a mistake in this window, you cannot erase any budget until you go to Cost Control, Budget Control to delete the budget control file which is related to this budget, then you

can come back to this window to delete your mistake. The reason why is because the computer automatically creates a budget control when you save a new budget. 4. To print a SOV summary report, click on Reports bar, Cost Control, Budget to opening up the Report Manager window. Under Reports Tree tab, computer should already highlighted the “Budget” report section. Under there, there should be many different types of report format you can choose from. For this homework assignment, highlight the 2nd budget report down called “Budget [Actual Costs Summary, Grouped by Group 1 and Group 2]”, then click Run at the bottom to see the print preview of the report. When everything looks good, click on the little “ ” button to print the report. There are many other things you can do to a report under the Report Manager window’s different tabs. However, for this assignment, you are not required to do any of that. Exit the print preview mode the same way you did it in task#2. Task #4: Create a transmittal cover sheet for your assignment Now as you have completed task #1-3, you are ready to create this cover sheet for your work in Prolog. 1. Go to Doc Control bar, Transmittals and Correspondence Log. When the window is open, enter today’s date under Date. This Log is logged by you (so type in your name). Check the Closed box. 2. Under General tab, Select the appropriate answer for Transmitted By, Company, To Attention, Company, Notice that if you have filled out your company setup correctly, your company’s address information should appear on this page. Under Delivered Via, select Hand which stands for it’s hand delivered. On the right hand side of the window, under Package Transmitted For, check the boxes in front of Information, Review. 3. Go to Detailed Items tab, Add Row. Enter the following information into there. *One item per row: Qty

Item

Description

Status

1 1

Report Report

Company Report SOV Budget Report

Completed Completed

Transmitted (for) Review Review

You only have to fill out the above information; the rest of the columns can be left blank. 4. Now Save it and while it is still open, click on quick print to open the Report Manager. Leave the report format at the default, and then Run it to preview. Print it! (This is your cover sheet for assignment 4.)

CM 415 Assignment #5, Prolog: Entering Contracts, Submittals, RFI’s and Daily Reports Objectives: Task 1: Entering the prime contract Task 2: Entering subcontracts Task 3: Entering submittal packages Task 4: Writing RFI’s Task 5: Writing a daily reports Task#1: Entering the Prime Contract Enter Prime Contract for the value of $1,936,735 1. Go to Cost Control bar, Contracts. The Contract window should be open. 2. Click on lookup buttons, select BYU Health Center as the company you are writing this contract to. Type in Prime Contract under Short Description. 3. Go to General Information tab, select Prime Contract from the pull down menu for Type of Contract, leave the Rules on “Controlled Total”. Under Scope of Work, type in “To complete the BYU Health Center Project Construction which include all material, labor, and equipment, except owner provide and owner install items.” 4. Go to Detailed Information tab, type in 1/23/02 under Contract Date and Issued On, type in 1/23/02 under Notice to Proc and Actual Start. Leave the rest as how they are. 5. Go to Contract Amounts tab, Add Row to enter the contract information. Under Description Column, type in Lump Sum Contract Amount, under Scheduled Cost, type in 1936735. 6. Go to Contact Info tab, for Main Contact and Signed By should select information that you have already entered, for From Company, select Your Name General Contracting (for example, my name is Tom Swift , so I would select “Tom Swift General Contracting”). Select Yourself as the main contact for that company, and you are also the one signed the contract. Type in John Doe as the First Witness. (select things use the button) 7. Now Save it. Leave this window open to continue the next task. Task #2: Entering subcontracts Enter Subcontracts with the five subcontractors below: Section 02200 earth work, with M.C. Green, $221,345 Section 03310 concrete, with RK Concrete, $179,867 Section 04200 unit masonry, with Max Masonry, $52413 Section 08110 steel doors and frames, with Door to Go, $33,900 Section 12300 cabinets and casework, with Captain Cabinet, $49,680

1. Click Add button to add a new contract. 2. Select the Subcontractor that you are having this subcontract with as the “To Company”. Enter “Earth Work” as the description. (enter the description according to the information given above.) 3. Go to General Information tab, under Type of Contract, select Subcontract, leave the Rules on Controlled Total, Select the adequate CSI Code according to the information given above. Enter #1 as the Big Package (for the 2nd subcontract, enter #2, for 3rd one enter #3, and so on and so forth.) Under Scope of Work, type in “All material, labor, equipment for completing the earth work on the BYU Health Center Project.” 4. Go to Detailed Information tab, and enter in the same information as what you have done in Task#1. 5. Go to Contract Amounts tab, do the same thing as you have done in Task #1, except change the Description for the contract accordingly. (for example, I would type in “Subcontract for Earthwork” for MC Green’s contract). Beyond Task#1’s instruction, you need to enter Spec Section number, choose adequate Budget Code accordingly. 6. Fill out the Main Contact, Signed By, From Company, Main Contract, Signed By, and Titles, First Witness accordingly. Remember, if you see a company or contact.

button, use that to select

7. Save this and continue with the rest of the subcontracts. After you are finished, you should have 5 individual subcontracts, each one of them is for a subcontractor, and each one of them should be linked with a Budget Code you have set up earlier in Assignment 1. 8. Close out of this window. 9. Print out another Budget Report just like how you did it for Assignment 1, same format report. Compare this report with the previous Budget Report you have to see what’s different now. 10. Print a Report to show all contracts for this project. Go to Reports, Cost Control, Contracts. It’ll take you to the Contracts Report folder. Highlight the 2nd contract report format called “Contracts[Detailed, Grouped by Contract Number]”, click Run to preview it. Take a look at it and make sure you have not missed anything that you suppose to enter. If everything looks good, click on the quick print button to print the report. Close out of the Report Manager. Task #3: Entering Submittal Packages Enter Submittal Packages for the 5 Subcontractors. So for each subcontract, you need to find the submittal information under the appropriate section in the Spec. Book. (For example, for subcontract section 02200, earthwork, you need to turn the spec book to that section and find the submittal section, which is under 1.3.A of that portion of specification). Do this for each

subcontract, so when you finish this task, you should have five individual submittal packages created. 1. Go to Doc Control, Submittal Packages. The way to enter a standardized Submittal Package Number for this class is: always enter 0001 for the first submittal package for each sub, in our case, we are only creating one package per sub, then we are only using “0001”, then after the dash line, enter the sub’s 5 digit CSI number. If it’s the first time the sub submits this package to you, then enter 0 as the Revision number. Description can be anything about this submittal package which makes sense. 2. Under Package Items tab, choose the appropriate sub as the Author Company, and choose whatever Importance that you think it is. 3. Add Row at the bottom half of this page to enter each submittal items. All the submittal items information can be found in the Specification book. Enter Spec Section, Sub (which stand for Sub section number, for example, for MC Green’s package, under 02200 of the spec book, the subsections are: “1.3.A.1”, “1.3.A.2”, “1.3.A.3”, 1.3.A.4”.) Also fill out the short Description as how it is noted in the spec book. Under Type, select according to the type of submittal it is. (for example, for a test report submittal, the type is going to be “Report”). Fill out Responsible Company as the sub who is responsible for submitting this item. Type in Received Date, Status, Action, and it is logged by YOU! Remember, however many little submittals you have under each spec section in the spec book, how many rows you will need to fill out. (For example, for section 02200, there are 4 submittals, so you should fill out 4 rows of information). 4. Go to Reviewers and Notes tab, Add a Row. Choose From Company, To Company, Sent Date, Received Date, Action, Sent For, Sent Via. (Use your head; think about your answer to these boxes to see if they make sense). 5. Do one submittal package for each subcontractor as the fashion shown above. 6. Close out of the Submittal Packages window. Go to Report, Doc Control, Submittal Packages. Choose the 2nd submittal package report format called “Submittal Packages [Detailed, Grouped by Each Number]”. Run it to preview. If everything looks good, Print it. Task #4: Writing RFI’s Write an RFI according to the scenario given below: Your Architect is requesting a price quote from you about some extra concrete work, so you need to write an RFI to your concrete sub to request this information by giving the sub the following data: Please submit a price quote to expand the concrete parking lot. Total LF of curb and gutter 160, total square feet of concrete parking area 360, stripping parking slots, road base and fill using current design. 1. Go to Doc Control bar, Request For Information.

2. Type in “Price Quote for Extra Concrete Work” as the Subject. (the key to write a RFI subject is that it is easy to find it from hundreds of RFIs, so a fairly detailed Subject heading is important). Choose High under Importance, check the box for Official. 3. Go to General tab, fill in today’s date as the Date Created, notice that a date will automatically appear in Date Required. If that is not the date you require this RFI to be answered, then change it by hand. You are the Author Company and Author of this RFI, and the concrete sub is responsible company for Answer this RFI. Type in “Please submit a price quote to expand the concrete parking lot. Total LF of curb and gutter 160, total square feet of concrete parking area 360, stripping parking slots, road base and fill using current design” as the Question. Choose Structural under Discipline, Price Quote under Category. 4. Go to Notes tab, Type in 03310 under Specification Section Reference. 5. Go to Collaboration, Add Row. Under From Company and From Contact, select your company as the “Origination of the RFI”, and it’s going to your concrete sub! After filling out all the From and To companies and contacts, enter today’s date under Date Sent. Check the Action box which indicate that action is required from your sub to do something about it, in this case, they need to give you a price quote. Select Information under Sent For; select Hand under Sent Via. 6. Go to Impact tab, check the Yes box for Cost impact, and leave the rest blank considering you don’t know the answer yet. (In real life situation, you will go back to this RFI and finish filling out the rest of the stuff after you receive the answer back from your sub or architect). 7. Save it and while it is open, click on the quick print button open up the report manager. Because you did this while the individual RFI is still open, so the computer has already highlighted the default format for that individual RFI. It makes printing much easier in this case. Leave the format there on the one already highlighted, then click Run to preview it. If it looks good, all the information that are supposed to be there is there, then Print it out. Task #6: Writing a daily report Activity:

Had safety meeting at 4 PM. It was held on the job site. Did punch list with flat concrete contractor for rear section of work.

Subs:

Workers on site: 12 drywallers, 3 steel framers, 6 HVAC, 4 sprinkler pipe Installer, 3 electricians, 4 roofers.

Equipment:

Man lift being used by roofers (charge 4 hours), sub backhoe being used For utility lines, struck phone line, phones out, not properly marked by Blue stakes, call for claim.

Materials:

Roofing materials being delivered, x-ray equipment delivered slip #1234567.

Weather:

8:00 am 45 degrees, 12 noon 59 degrees, 5 pm 54 degrees; wind light from

South east, clear, few clouds. •

Go to Field Admin bar, Daily Work Journal. Enter today’s date as the Date it’s created. Choose your company as the Company who authorized it. Choose N/A under Crew.

•

Go to Daily Work Description/Schedule tab, Under Work Description, type in the information under Activity given above, and type in Materials given above.

•

Go to Manpower/Labor tab, Add row. Under each row you add, select the appropriate Trade according to information given above for Subs. Select Worker for all Classification for these workers on site, fill in the quantity according to the information given above. Under UOM (unit of Man power), type in man for all of them.

•

Go to Equipment tab, Add row. Each row will be one piece of equipment’s information. Use the information given above to fill these out, and choose equipment pieces accordingly. Enter in the correct quantity given above and under UOM, for Man lift, type in “Hour”, for Backhoe, type in “LS”. And for Backhoe, you also need to enter “Phone line was struck down due to false mark by Blue Stake” under Notes.

•

Save it now. Go back to Daily Work Description/Schedule tab.

•

Notice there are several buttons on the right hand side of this window, click on the “Event” button. Now you should be in a window called “Events”.

•

Under Event Type, choose Safety Meeting.

•

Go to General tab, check the closed box, enter Time and Location of the meeting according to the information given above. Under Description/Notes, type in “standard weekly safety meeting. Today’s subject is __________” (create the meeting’s subject however you want to). Save it and leave it open, then hit quick print button to open up the Report Manager again. Leave the report format on the one already highlighted, then Run it to preview, then print it if it is how you like it. Now close it.

•

Go back to Daily Work Journal window again. Click on Daily Detail button to open that window.

•

Fill out the time and Temp Value according to the information given above. Type in the weather information given above in the “Weather Conditions” section. Under Wind, type in light.

•

Now Save it and close out of there.

•

Activate the Daily Work Journal window again. While it’s open, click on quick print button to open the Report Manager. Leave the report format on the one it’s already highlighted then click Run to preview it. Print it!

CM 415 Assignment #6, Prolog: Practicing in Prolog Objectives: Task 1: Writing a change order request Task 2: Writing an application for payment Task 3: Recording meeting minutes Task 4: Issue a Safety Notice Task 5: Complete a punch list Task #1: Writing a change order request On February 15, 200X, you (representing Campus Construction Co.) have sent the Architect (Valentiner…) a request about extra concrete work totaling $20,510 (which will be provided by RK Concrete co.) due to the redesign of parking lot and landscaping area which has changes certain sections of asphalt to concrete instead. You need the money before March 15, 200X. Write a Change Order Request to your architect for it. Creating a Change Order Request: 1.

On the Switchboard, click Cost Control and on the menu, click on Change Order Requests.

2.

In the Description field, type: additional concrete for parking lot & landscape area.

3.

In the Status field, choose pending as the status.

4.

In the To Company field, choose your architect as the recipient of this change order, and Attention to their default contact.

5.

In the From Company field, choose you because you are the one sending out the change order request and you are the Contact from your company.

6.

There is 0.0 requested days, and you need to fill in the requested amount.

7.

The Initiated date is the date when you sent your Change Order Request, and the Required Date should automatically pop up.

8.

In Category field, choose Direct Cost considering that the change order is about concrete material

9

In Notes field, input the reason the project needs additional concrete work being done (redesign of…, change some asphalt to concrete).

10.

Save this form and while it is still open, go click on and leave the report type on the one the computer already selected, run the report, after you check the print preview and everything looks good, then print it out.

On March 1, 200X, the owner (BYU) has only approved the change order amount for $15,950.The owner said they will not give the rest of the money until further information can be obtained. Write a Prime Contract Change Order to your owner.

Creating a Prime Contract Change Order: 1.

On the Switchboard, click Cost Control, and on the menu, click Prime Contract Change Orders.

2.

In the Contract Number list, select 001-Campus Construction.

3.

In the Description field, type: Redesign of parking lot & landscape area

4.

Mark the Closed box considering this change order has been responded and approved by the owner.

5.

In the Date field, put the date you received the response from the owner.

6.

Input the Approved Amount in.

7.

The Notice to Proceed date is March 15, 200X.

8.

In Category field, choose Design Changes.

9.

In Status field, choose Approved.

10.

Click on Tab Other Information, Fill in all the Company, Contact, Signed By, Title fields with appropriate information. Remember that this change order is to your project manager and is from you.

11.

(*This step and the following step cannot be completed until you do your Potential Change Order, so come back to finish the rest up after you do your Potential Change Order.) Under Tab General Information, add a link to the Potential Change Order (PCO) you created.

12.

Save this form and while it is still open, go click on and leave the report type on the one the computer already selected, run the report, after you check the print preview and everything looks good, then print it out.

On the same day (March 1, 200X), after you receive the notice of the approved change order amount of $15,950, you realize there is a deficiency of $4,560 which is not settled yet. There are three possibilities to settle this cost: 1) provide the further information to the owner and get it approved, 2) you (the GC) eat the cost, 3) you pass it on to the sub and the subcontractor eat it. Write a Potential Change Order to your owner to show that there is a cost deficiency of $4,560 which has not been approved yet. Creating a Potential Change Order: 1. On the Switchboard, click Cost Control and on the menu, click on Potential Change Order. 2. In Description field, type in: Unsettled cost for redesign parking lot & landscape. 3. Make sure that both Approved for Budget and Closed boxes are not checked. 4. Input the Date as the date when you receive the response from the owner.

5. Under Category, choose Design Change/Field Condition. 6. Under Reason, choose Owner Directive as why this change order exists. 7. Make sure Notification Required box is marked. 8. Put March 15, 200X as the Required Date for this amount of change order. 9. Under Notes, write out the 3 possible solutions the homework instruction has provide which might solve this cost deficiency problem. 10. Go to the next tab Detailed Information, click on Add Row button to add a row. 11. Under Description, type in Unsettled cost for redesign parking lot & landscape area. 12. Under Orig Estimate and Proposed Amt, type in the cost amount which was originally planned for your change request. ($20,510) 13. Under Approved Amt and Applied Amt, type in the amount that the owner has agreed to pay so far ($15,950). 14. Under Budget Code, link to the adequate budget code which relates to concrete work. 15. Under Bdgt Allocation, choose Pending Revisions. 16. Under Cost Allocation, choose Use Uncommited Costs(Pending). 17. Save this form and while it is still open, go click on and choose "Potential Change Order [Detailed, Grouped by Each Number]" as the report type, run the 18. report, after you check the print preview and everything looks good, then print it out. 19. (*Now you can go back and finish up the last few steps for Prime Contract Change Order). Task #2: Writing an application for payment You have met with the architect and have agreed that the first months pay application is for 18% of the contract amount. Write an Application for Payment for it. Creating a Application for Payment: 1.

On the Switchboard, click Cost Control and on the menu click on Application for Payment.

2.

In the Contract Number list, select 001-Campus Construction. A message will pop up says “There are no previous applications for payment against the current contract. Do you want to load the schedule of values?” Click on Yes.

3.

In App Date field, press CTRL+D.

4.

Under Period field, type in current, and a message will pop up to prompt you to set up this new cost period, click Yes, and when the Cost Periods window comes up, fill in the date for payment from 2/1/01 to 4/1/01, then click OK to return to the Application for Payment window (the computer will prompt you to save the document at this point, click Yes to save it).

5.

Under Itemized Breakdown tab, under Percent Complete, type in the percentage given in the homework instruction under Task #2.

6.

Under General Retain Percent and Stored Material Retain Percent, type in 5% for retainage percentage.

7.

Click on Add CO to import the Change Order you have created, under Category, choose the division of work that the change order is related to. (double check to make sure there is no percentage of work has complete for this change order and there is no retainage placed on the change order).

8.

Go to Tab Other Information, put in your owner as who you are sending this to (if you have not set up BYU as the owner of this project, you need to go to Company Setup to set up that first) and put you as the one who this application is from. Fill in all the Company, Contact, Signed By, Title as instruction has directed.

9.

Under Approved Date, use CTRL+D.

10.

Under Category, choose Prime.

11.

Save this form and while it is still open, go click on and leave the report type on the one the computer already selected, run the report, after you check the print preview and everything looks good, then print it out.

Task #3: Recording meeting minutes You meet weekly with the architect, and project manager on Wednesday at 9 a.m. at the job site. Your last meeting was last Wednesday and it went for approximately 2 hours, and the next meeting will be held next Wednesday at the same time, which is a week from now. Record a Meeting Minutes to confirm that 1) the month’s pay application was agreed to at 18%, 2) that Change Order #1 was approved for $15,950 and there is $4,560 in unapproved change orders that is waiting for additional information. Creating Meeting Minutes: 1.

On the Switchboard, click Doc Control, and on the menu click Meeting Minutes.

2.

In the Meeting Set field, choose Owner, Architect, Contractor as the appropriate meeting type.

3.

In the Meeting Date field, press CTRL + D.

4.

In Time Started and Time Ended fields, fill in the correct time given in the instruction.

5.

On the Meeting Items Tab, click Add Row.

6.

In the Description column, type in the first thing that has been discussed during the meeting (given in the instruction). The computer will pop up a message to ask you if you want to set the “last modified date” to the meeting date you have put in, click Yes.

7.

In the Responsible column, choose the company who is responsible for the payment (your owner).

8.

In the Status column, choose Approved which stands for that the application has been agreed by both parties.

9.

In the Topic column, choose Financial which shows that this meeting issue is about financial responsibilities/payments. Keep in mind that the issues discussed in a meeting typically have different topics.

10.

In Due Date column, type in 4/01/200X as the deadline for payment. (industry norm is to pay by the last day of the month)

11.

Mark Closed box to show that this meeting issue has come to an agreement and is not going to be discussed during the next meeting.

12.

Click on Add Row again to add another row for the 2nd meeting item that you have discussed with the owner/architect (given in the instruction). Follow step #6-10 to complete this row.

13.

Go to Other Details Tab and under Purpose of Meeting, type in To discuss issues to maintain owner and contractor satisfaction.

14.

In Location of Meeting, type in Job Site Office.

15.

In Next Meeting Date and Next Meeting Time, type in the date and time you are going to have your next Owner, Architect, Contractor meeting.

16.

In Prepared By and Prepared by Company fields, choose your name and your company name to fill in the fields.

17.

Go the Attendees/Courtesy Copies Tab, click on Add Row under Attendees section.

18.

Under Company column, choose your company as one of the companies attended the meeting, and under Contact column, choose your name. Check Send box which indicate you are going to send a copy of the Meeting Minutes to that person as a record.

19.

Click Add Row again and follow step #17 again to fill in another person who has attended the meeting, and keep repeating this process until you have input all the people that have showed up for the meeting.

20.

Save this form and while it is still open, go click on and leave the report type on the one the computer already selected, run the report, after you check the print preview and everything looks good, then print it out.

Task #4: Issue a Safety Notice At your latest safety meeting you became aware that the site work contractor did not have the proper slope on their trenches and could be a possible OSHA violation if discovered. Issue a Safety Notice to the Site Work sub contractor for the above safety issue. Creating a Safety Notice: 1.

On the Switchboard, click Field Admin, and on the menu click Safety Notices.

2.

In the Date field, press CTRL+D.

3.

In Subject field, type in Trench Slope Problem.

4.

In Type field, type in Improper Slope as the type of violation you are addressing. When the computer prompts you to set up this new look up group item, click Yes to set it up. Under Type ID of the Lookup Groups Maintenance –Safety Notices window, type in IS (initial for Improper Slope) as the Type ID for this type of violation, click OK to return to the Safety Notices window.

5.

On the General Information Tab, in the To Company and Attention fields, choose the subcontractor (M.C. Green)and the sub’s main contact as who you are sending this notice to.

6.

In the From Company and Authored By fields, choose your company and you as the one who is sending out this notice.

7.

In Status field, choose ASAP.

8.

In Category, type in Potential OSHA Violation. When the computer prompts you to set this new look up group item up, click Yes to set it up. Type in POV which stands for Potential OSHA Violation as the Category ID, then click on OK to return to the Safety Notices window.

9.

In Details and Action Required field, type in the action the sub has to take in order to fix this problem and to comply with your safety policy to avoid OSHA fines.

10.

In Due by field, type in the date which is a week from today as the deadline to fix this safety problem.

11.

Go the Detailed Information Tab, in Case Number field, type in 2-001 which represents that the safety notice is related to CSI Division 02000 work and this is the first safety notice you are giving out for this division of work.

12.

In Safety Code Regulation field, type in CFR 1926.P which stands for 29CFR, 1926 regulation, sub part P on OSHA site.

13.

In Safety Jurisdiction field, type in OSHA-Inspection

14.

In Responsibility field, type in your sub company’s name.

15.

In Employee Involved field, type in Billy Bob as the guy who was digging the trench slope.

16.

In Witness field, type in your name.

17.

In Location field, type in On Site Trenches.

18.

Save this form and while it is still open, go click on and leave the report type on the one the computer already selected, run the report, after you check the print preview and everything looks good, then print it out.

Task #5: Complete a punch list Complete a Punch List to concrete contractor (RK Concrete) on rear of building for the owner to take occupancy, 3 items: A.

Crack in south west section of drive way

B.

All forms must be hauled away

C.

One high spot in water test in south west section, must be ground down

Creating a Punch List: 1.

On the Switchboard, click Field Admin, and on the menu click Punch List.

2.

In the Area 1 list, type in rear of building.

3.

In Responsible Company, Contact, Author Company, Authored By fields, fill in the appropriate companies or contacts (remember that this is a punch list to your concrete sub contractor and this makes this specific sub responsible for this specific punch list, and you are the one issuing the punch list).

4.

Under Description field, type in the 3 items given in the homework instruction.

5.

In Inspected, Rec’d On, Issued On fields, press CTRL+D to fill in today’s date.

6.

Save this form and while it is still open, go click on and choose Punch List [Detailed, Grouped by Area] as the report type on the Report Manager, run the report, after you check the print preview and everything looks good, then print it out.

Now you have finished this Prolog assignment create the Transmittal Cover Sheet for this assignment.